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I never understood that mentality. Most money is made investing patiently over the long haul. In any other area of life where people have to pay money to buy something, they love when it gets cheaper so they can buy it at the best price possible. I actually get exuberant when markets sell off, I LOVE SEEING RED. When markets rise, it's makes me sit on my hands because I dont want to overpay. What am I missing here? Why do people cheer when markets go up, and get depressed when markets go down. This is an opposing mindset to most other purchases/acquisitions that people make in their lives
For older people, who might be at the point in their life when they are moving money from stocks, to safer places, I understand it. You've already had your money in for a long time, and now you want to take it out at the highest possible gains. I've had people who pay their rent from stock market funds, and sometimes when the market is really down, they are late on rent, and willing to pay the late fees, because they don't want to pull money out during a slump.
What I don't understand is when young people (say, under 40) are happy the market goes up. I'm 34, and have only been investing for a few years now, and as far as I'm concerned, I'm happy to see the market stay fairly flat for a few years while I build up some capital. I don't want to see it climb a lot until I'm ready to take money out, 30 years from now.
But from a different viewpoint, the stock market is an indicator of consumer confidence. When people are confident in the market, the stock market climbs. So it is nice to see it climbing overall, because that means people are confident in our market, which is a "good thing" (TM).
So while part of me likes to see the market stay flat so I can keep investing at a low cost, part of me rejoices to see when the market had a good week, because maybe it means better times are ahead for the economy.
1- if they go up enough you can rebalance in the short term ,take some money and buy something in addition to or buy some laggards in other asset classes.
2- main reason is:
if you read the book your money your brain by jason zweig you learn that our brains are not very rational.
we hate loosing money far more than we like making it so the days that we are down our human reaction is one of disgust.
on the days its up the brains reasoning is this is how its always going to be and every day you will have more and more.
thats why you have to becareful in down turns. your brain isnt feeding you neutral logic as to what you should do. it will push you to bail out, loosing money if you allow it.
great book and its all done with real people with real money at risk and modern brain imaging equipment.
I never understood that mentality. Most money is made investing patiently over the long haul. In any other area of life where people have to pay money to buy something, they love when it gets cheaper so they can buy it at the best price possible. I actually get exuberant when markets sell off, I LOVE SEEING RED. When markets rise, it's makes me sit on my hands because I dont want to overpay. What am I missing here? Why do people cheer when markets go up, and get depressed when markets go down. This is an opposing mindset to most other purchases/acquisitions that people make in their lives
because the majority of investors make money when the market goes up and lose money when it goes down... are you seriously asking this question? lol
because the majority of investors make money when the market goes up and lose money when it goes down... are you seriously asking this question? lol
Only true if you are a short term investor. Technically, if the market goes up now, I'm losing money in the long run, because next month, when I go to make my monthly investment, my money will buy fewer shares. If the market went down now, my money would buy more shares. For a long term investor, you want the market to be as low as possible when you are in the investing stage and then make huge gains in the short time before you are entering the withdrawal phase. Anything else is a net loss of potential money.
typically thats why dollar cost averaging doesnt work well.
markets generally are up 2/3 of the time and down only 1/3 so the little bit you pick up in the drops is really nothing to what you loose by buying in higher and higher over time.
I never understood that mentality. Most money is made investing patiently over the long haul. In any other area of life where people have to pay money to buy something, they love when it gets cheaper so they can buy it at the best price possible. I actually get exuberant when markets sell off, I LOVE SEEING RED. When markets rise, it's makes me sit on my hands because I dont want to overpay. What am I missing here? Why do people cheer when markets go up, and get depressed when markets go down. This is an opposing mindset to most other purchases/acquisitions that people make in their lives
Because they are happy that their PREVIOUS acquisitions have gone up in value. It is better to be happy than sad and better that over the long haul happiness prevails. You must have just been beside yourself with joy in March 2009. I mean how much better could it get than that.
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