31
Oct
2008
In times of financial crisis don’t follow the crowd!
It is difficult to invest your money in stock when everyone else seems to be selling. Typically all people are social creatures and we are not really eager to stand out from the crowd. Therefore, when the crowd is filled with fear and is running away from the market, it definitely requires some guts to walk in the opposite direction. Nevertheless, as Warren Buffet famously said, the successful investor should be ‘greedy when others are fearful and fearful when others are greedy.’ And I don’t mean to say that you are advised to throw your money away on stock in companies with a considerably impaired outlook, but there is still a great number of companies with excellent track records of profitability and growth, powerful management teams, great product lines, and innovative R&D, which have been dragged down with the general market to very low prices indeed. Although I am not going to give you any specific stock picks, you should remember that there are still some great buys out there for you to profit from.
In contrast to so many other things, stock can be valued, and in many cases market prices have gotten way out of line with what shares in companies are worth. Obviously, when stock increases to a price which seriously exceeds its value, it is probably the time to sell, but the market we are currently in is a bargain bucket for discerning buyers.