Whenever a stock is bought it is the temptation and hope but not the fear. Many times the trade is made without much of analysis no matter what the stock did in the past it assumes a new life once an investor owns its, and he looks forward to a rosy future. But these simple expectations become complicated by what actually happens it is greed which raises new doubts, new concerns, and conflicts and we wait for more profits and this waiting turns a profitable trade in to losses. So a psychic dilemma with ego, id, and superego turn the situation in a state of constant battle.
Lesser profits are better than no profits or losses. Control greed and take rational decisions about exiting the stock. The execution is more important than reading or writing.
Learning from the mistakes is more important “To the public mind, selling is never sound. It always conveys the possibility of being wrong twice: first, admitting that they’ve made a buying error; second, admitting that they might be wrong in selling out. ”
It is very important to analyse and accept realities and markets are ruthless:
Whenever the stock market is on its peak stocks change hands from strong hands to weak hands.
When the stock market is on the peak buying a stock is like sheep entering into a slaughter-house. “The famous quote from wall street II: Bulls make money, Bears make money and Pigs get slaughtered”
When the market is on peak everyone is convinced that the market cannot go down or even it gets down it is an opportunity to buy.
Market peak is characterized as desperate buying.
When the markets are bottomed out stock changes weak hands to strong hands.
When it goes down more it becomes bargain hunting for smart people but distress selling for the crowd.
When everybody is convinced that the stock market cannot go up, it is normally the reversal point or beginning of a bull market. “May be the present scenario”
At both points whenever the market is on top and when it is at its bottom it behaves in irrational way.
The valuation of the stocks never holds good they remain far away during the phase when the market is on its bottom or peak
Emotions/sentiments/and volatility attains it peak when markets are not rational trading at their peak or on bottom.
To conclude the above the entire market cycle is lurks the fear of finalizing the deed, of taking it from dream to reality by selling.
The song holds true here:
“Know when to hold em
Know when to foldem
Know when to walk away
Know when to run”