A must read for everyone …

Lessons from financial market cycles is a must read for everyone . Learnings from various financial cycles have been put together for readers by Amit in a very simple way , easy to understand . One should Learn from these cycles and learn to invest when others r fearful and disinvest when others are greedy.

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Imagination …

Humans are believed to be the only animals with the power to imagine. We can imagine situations that are not there yet, or events that have yet to take place. This ability has probably been one of the major factors behind all developments.

So when we are feared, we imagine the possibility of an event with unacceptable or bad outcome. And imagination of profit leads to en emotion known as greed.

#RidingTheRollerCoaster – 161

Thinking in a bull market and a bear market …

If you attend investor meetings in various market cycles, you realise that there is a pattern in the questions. In a typical bear market, the questions tend to focus on challenges and risks, whereas in a bull market, the focus shifts to opportunities.

See the following post and the article on which it was based:

Unicorns, cockroaches and investment decisions

A good story is seen with suspicion in a bear market under the influence of fear and doubt, whereas questions are set aside when greed takes over – a typical bull market.

It is important to understand that in all market citations, there are opportunities and challenges. However, neither can be controlled by individual investors or advisors. We can at best take advantage of these. Or we can protect ourselves from the negative impacts of these.

That is possible only if we focus on what is in our control and what is not.

Read the “Serenity Prayer” (Page 199 of the book) and the subsequent discussion.

#RidingTheRollerCoaster – 126

 

 

Imagination

Humans are believed to be the only animals with the power to imagine. We can imagine situations that are not there yet, or events that have yet to take place. This ability has probably been one of the major factors behind all development.

So when we are feared, we imagine the possibility of an event with unacceptable or bad outcome. And imagination of profit leads to an emotion known as greed.

#RidingTheRollerCoaster – 83

Emotional or rational

When the stronger emotions of greed and fear take over, rationality is thrown out of the window.

“Riding The Roller Coaster – Lessons from financial market cycles we repeatedly forget” is a story of two roller coasters – one in the market (visible) and the other in our minds (invisible). The emotional roller coaster could turn out to be more harmful than the one outside in the markets.

#RidingTheRollerCoaster – 81

Fear and greed

Both fear and greed are a result of what is happening in the external world – actually our reaction to the events in the outside world

#RidingTheRollerCoaster – 22