Thursday, February 2

Victim of fear? Why is doing the opposite so lucrative? By CoinTelegraph

©Reuters. Victim of fear? Why is doing the opposite so lucrative?

Markets are essentially irrational. We can explain this irrationality in many ways. On the one hand, we have mass psychology. In other words, the mass is wrong quite often. In fact, it is quite clumsy. On the other hand, we are talking about very complex systems with extremely erratic patterns. So investing is guessing. That is, we invest with certain expectations. In this sense, at least in the short term, the markets are a set of collective opinions about the future. The problem is that the future is unknown. This paradox explains the fluctuations. Volatility is doubt. Words more, words less, a market is a roller coaster of emotions.

The future is an expectation. The past is history. The present is perception. Rather, the market is subjectivity. The press invents what it does not know. Bulls sell optimism. Bears sell pessimism. And today’s narrative will almost certainly be replaced tomorrow. Value is abstraction. Everything is an illusion. But, fortunately, not everything is absolute chaos. Over time, we have discovered that “bull markets are born in pessimism, grow in skepticism, mature in optimism, and die in euphoria”.

  • Inflation, Debt and Currency: Is a Credit Crunch Coming?

Markets are governed by sentiment. Let’s talk about fear first. The average investor tends to fall for the hype. For some strange reason, he thinks that the bad thing is worse than it really is. On the other hand, he thinks that losing streaks are longer lasting than they really are. So, you overreact all the time. We could say that the markets are quite dramatic. The fearful sell, because they think the price is going to fall. And the price goes down because of the fearful. It is a self-fulfilling prophecy. But in the mind of the fearful it is clairvoyance.

Read the full article on Cointelegraph

Legal warning: Fusion Media would like to remind you that the data contained in this website is not necessarily real-time nor accurate. All CFDs (stocks, indexes, futures) and Forex prices are not provided by exchanges but rather by market makers, and so prices may not be accurate and may differ from the actual market price, meaning prices are indicative and not appropriate for trading purposes. Therefore Fusion Media doesn`t bear any responsibility for any trading losses you might incur as a result of using this data.

Fusion Media or anyone involved with Fusion Media will not accept any liability for loss or damage as a result of reliance on the information including data, quotes, charts and buy/sell signals contained within this website. Please be fully informed regarding the risks and costs associated with trading the financial markets, it is one of the riskiest investment forms possible.