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Thursday, May 6, 2010

Investing 201: Fear

After looking at today's crash a clear and present fear resides in many investors hearts. The problem is the fear shouldn't be in the heart, but instead in the mind, letting emotions drive your investing is a sure way to lose your money. Pouring gas on the fire in terms of following the mass hysteria of sell-offs will surely end in despair, or very little reward. This is not to say that going against the grain of pertinent information is wise, but instead look at the information and make an informed opinion.
If like most of us, you have little understanding or knowledge of beta's, P/E ratios, and the ubiquitous use of financial earnings data, you shouldn't just look at CNN, do more research. Read recent events in the company and the larger sector of which the stock resides, so much easily understandable information can be gleaned by simply reading about the sector in general.
Fear is healthy when putting your future, in terms of money, into a company that you do not know, do not understand, and only invest in based upon a loud mouth on a stock report. Do your homework, be vigilant, and know where your putting your money!

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