Investing BMW stocks
07-27-2008, 05:30 AM
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Originally Posted by mrfva' post='633512' date='Jul 27 2008, 03:30 PM
"This term is used in the investing world to refer to the forces that cause unsubstantiated rallies or sell-offs."
Which is quite opposite of what I said... my point being is that when everyone else is following the herding instinct (sell, sell, sell -- or buy, buy, buy), you have to go in the opposite direction. This is a general statement (of course) which would also require some research on your part prior to any investment activity. The problem with herd instinct is that people do what they see most folks do, not necessarily knowing why -- but simply because everyone's doing it. And if everyone's doing it, it must be right
.
Which is quite opposite of what I said... my point being is that when everyone else is following the herding instinct (sell, sell, sell -- or buy, buy, buy), you have to go in the opposite direction. This is a general statement (of course) which would also require some research on your part prior to any investment activity. The problem with herd instinct is that people do what they see most folks do, not necessarily knowing why -- but simply because everyone's doing it. And if everyone's doing it, it must be right
.
Rule no 1 of economy right? This happens mostly when a few major players start selling or buying stocks regarding a particular case or even a more general approach when some major player dumps/withdraws money on the market. Also it can happen from a rumor.
But what you say is pure speculation. Don't forget that there are many many others who think like you, probably myself included (not a player though) so to buy when everyone else is selling is general speculation and comes under the same statement "herding instinct". You're not flying as the other birds are flying to a presumably warmer place but instead you're going the other way around just because you think they are all wrong. Remember there are lots of players like that on the market and if they react like that all i can say is that they are simply gamblers without any "unsubstantiated" motivation. But that's just my interpretation.
07-27-2008, 05:34 AM
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Originally Posted by mrfva' post='633515' date='Jul 27 2008, 03:34 PM
Point taken 
You should always research (of course) prior to investing.
You should always research (of course) prior to investing.
Moreover you should do portfolio to reduce the systematic risk by diversification
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