I started serious Investing Journey in Jan 2000 to create wealth through long-term investing and short-term trading; but as from April 2013 my Journey in Investing has changed to create Retirement Income for Life till 85 years old in 2041 for two persons over market cycles of Bull and Bear.

Since 2017 after retiring from full-time job as employee; I am moving towards Investing Nirvana - Freehold Investment Income for Life investing strategy where 100% of investment income from portfolio investment is cashed out to support household expenses i.e. not a single cent of re-investing!

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This blog is authored by an old multi-bagger blue chips stock picker uncle from HDB heartland!

"The market is not your mother. It consists of tough men and women who look for ways to take money away from you instead of pouring milk into your mouth." - Dr. Alexander Elder

"For the things we have to learn before we can do them, we learn by doing them." - Aristotle

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Sunday 22 August 2010

Do you have respect for Market Wisdom and Crowd Behaviour?

The stock price movement is, in effect, more often or not conveying the collective wisdom (TA and FA) of the entire market; but some time this collective wisdom will be over-powered by the madness of crowd behaviour - forces of greed and fear.

'I can calculate the movement of the stars, but not the madness of men.' - Sir Isaac Newton

This madness of the crowd normally doesn't last long. Soon the market storm will be over and calm return to the market and once again the collective wisdom of the market will continue to drive stock price - either up, down or side-way for another period of time.

For a shorter while, yes, you may go against the madness of the crowd and benefit from it; but for a longer while it is still better to respect the collective wisdom (TA and FA). It is always worth asking yourself why you are right and the market is wrong? How come you seem know more than the market through publicly disclosed materials while smart money and big boys are not? In fact, most smart money and big boys have more access to non-publicly disclosed materials and they should be better informed than most retail investors.

We mustn't forget that these smart money and big boys have only one objective in the market - to make money for themselves and their investors. For a longer while, they are unlikely not to discover any market gems. So after 1 or 2 year of holding the stock, if the stock price still doesn't move in your favour, most likely you are wrong and the market is right.

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