Peter Lynch wrote Alone in the stock marketWe continue with the second part of his book.
“When we look at the past, it is seen that there is a cycle for stocks. After the stock market collapses, many people are resentful for a long time or move away from the stock market, but when the stock market starts to gain value, many people see it as an opportunity. The share prices are already starting to invest after the rise of an investor who wants to win.
We see that similar cycle is in the crypto sector. If you examine the graphics temporally, it is quite possible to see recurrent patterns. Many people question when the bull will come, but those who invest in the markets when the markets are most dead and everyone is offended has already begun to experience the bull period. Therefore, you can make long -term investments by investigating the cycles in the stock exchanges.
Is it possible to know the bottom or peak point?
On the other hand, Peter Lynch emphasizes that everyone thinks that he is more intelligent by acting with the opposite psychology. “Everyone began to grow up while selling while waiting for a rise and everyone can buy while waiting for a decline. Even though they have an insight that they are better than anyone else, everyone thinks like them.In our article about cognitive bias, we have committed this issue (you can see my article titled “to sell while buying others in crypto, to buy others while selling). First of all, many people tend to believe that they are smarter, that they solve the market faster than anyone on the market, and that their potential is higher than others. The fact that everyone is so good in a place where they are very good shows the irony of the work. Secondly, it is never possible to know the bottom or peak point, someone who says what he knew is either lying or his chance. It is a non -rational option to think that you can buy it at the bottom and sell it at the top. At this point, what needs to be done is to adopt gradual trading strategies and strengthen your al-sale muscle. In this way, you can get closer to the bottom point by reducing your cost in purchases, and you can increase your profit by pulling your sales point higher in sales.
Someone should hurt so that others can make a profit
“A careless investor is constantly passing through three emotional stages: concern, happiness and surrender. First, he does not buy the appropriate shares at an affordable price, concerning that the stock market will fall or the economy will deteriorate.If we make an addition to this, then the same investors claim that this sector is a fiction and that it does not serve anything other than fraud, and criticizes people who invest in this sector and make bad comments. However, when the existing situation is examined rationally, someone should harm so that others can make a profit.
Importance of alternative action plans
In a period when everyone is extremely concerned, you should review your purchasing decisions and your sale decisions during periods when everyone is extremely happy. The surrender part represents investors who have the idea that “of course returns one day ve and counts where they are nervous and stress for a long time. For example, in 2018, an investor receiving XRP from the top took seven years to come to the cost… On the other hand, a person who fade in 2021 waited for three years. A smart investor that you will understand should only control his portfolio, prepare alternative action plannings for him and know how to cut damage after a certain level.
Is it necessary to try to hold the falling knife?
“There are some widespread thoughts that amateur and careless investors have in the same direction”, olmon no longer descend more after landing ”,“ The shares of good companies will rise ultimately ”,“ The stock market requires patience, this decline cannot scare our eyes ”,“ The lowest price to be descended is certain, but the lowest price is used by the investors. Many amateur investors try to make purchases by thinking that a product that has started to fall, but this is like trying to hold a falling knife. However, after the knife is stuck on the ground, it will be a much more logical movement. As prices continue to decrease further as they add goods from the bottom and try to reduce their cost, people may suffer tremendous damages. Therefore, it is a much more logical strategy to add a product to the portfolio after watching a product that has started to decrease for a while and following the news about the company. There is no transaction only by looking at the price movement, but you also have to follow the news and the company’s projects.
“After that long, he cannot come out anymore anymore”. Trying to predict how much a stock can rise is also very pointless because as you continue to improve company products, improve self -improvement and make new investments, their shares have no end to the price increase. For example, the prices of NVIDIA shares continued to rise by investors as they said “it falls from here”. This, as we all know, affected coins about artificial intelligence. In summary, as long as the situation of the organization is good, there is no logic of disposing of, the price of the product may continue to increase. At the same time, if you think about the profit rate missed by people who make early sales in a place where many professionals will fall, you can actually understand what it means with Peter Lynch’s first advice.
