16 August 2012

Happy Investor Vs EQ Investor: When stock price is DOWN

Day 1:

When Happy and EQ Investors have seen Stock XYZ falls 20% from $1.00 to $0.80, both of them have the same idea - What is good chance to cheap buy some XYZ company's shares.

After few days
The price dives further to $0.75.
Happy investor: Nobody can predict future or can predict other people behaviour in short term, so who knows got people want to cheap sell Stock XYZ in the short term. I am not able to predict human being behaviour and thought, especially I have no idea who are going to buy or sell or hold the stock.
EQ investor: My money is stuck!!! Bad stock!! Shit!!! Lame!!!

After few months
The price drops again to $0.70.
Happy investor: Hmmm... Look no bad. Much attractive, prepare some money to rebalance it if it drops further.
EQ investor: Oooh!!! It is a trap!!! It is a trap!!! Cut loss or hold? Cut loss or hold?? Hmmm... (suddenly the sell volume is increasing rapidly) SELL!!!

Next day
The price soars back to $0.80.
Happy investor: Although I missed the chance to cheap buy some more, there are plenty opportunities in stock market.
EQ investor: WHY!! WHY!! WHY!!!

By skipping the middle part of the story, it looks like nothing happens, the price of company XYZ is still $0.80. Although both Happy investor and EQ investor do the same decision initially, both of them ended up opposite consequences. The former have successfully collect some XYZ shares in his portfolio as a long term investment; the latter have wasted his time, money and healthy. Are you a Happy investor or EQ investor? That's all for today. More fascinating articles and sharing will be updated from time to time in Xaivier Blog. So, you are welcome to subscribe our feed, look at our sitemap or simply visit our Homepage.

Written by: Xaivier Chia


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