When Others are Scared


Another Warren Buffet Quote
 
Another one of my favorite quotes by Warren Buffet says, “Be Greedy when others are Fearful, and Be Fearful when others are Greedy.”

Now, don’t misunderstand, I don’t take lightly that the Coronavirus is a problem.

I am just not sure if it is as big of a problem as we are hearing from the media.

Right now, fear is driving the stock market - it is behaving very irrationally.

So, what does this mean?

Just a few weeks ago, the stock market was going up almost daily - was hitting all-time-highs.

This, in my opinion, was a sign of greed.

It got to the point we were expecting it to go up daily.

This caused individuals to buy stocks they may not normally have bought – looking for a quick buck.

When this greed sets in, this is when you should be cautious.
 
 
When Fear Provides Opportunity
 
We are seeing the opposite of greed today; we are seeing fear.

People are selling stocks and running for the doors.

When enough people sell, that causes stock prices to drop.

When everyone is selling, that causes them to plummet.

This is when you find opportunities – or in Warren Buffets words, when we should be greedy.  

As people run for the exits, amazing opportunities present themselves.

This is what he means by greed.

He’s saying, we need to think rationally and find the opportunities.  

Think long-term when others are thinking short-term.

There are many stocks I was nervous to buy weeks ago because I felt like greed had caused prices to rise too quickly.

And now, just two weeks later, I have the opportunity to buy a few stocks at a 10-20% discount.

This can only happen if I seize that opportunity – and that requires setting fear aside.  
 
Is the Coronavirus a Real Threat?
 
It depends on who you ask, and only time will tell.

But what matters from a financial stand point are two things:

Am I prepared financially if a recession is beginning?

Am I thinking long-term and taking advantage of lower stock prices?

These are the important questions in my mind.

Nobody knows if this virus will spread out of control.

If we are prepared, we make much better decisions.

If we aren’t prepared, fear can cause us to act irrationally.

And this can lose us a bunch of money!
 
Conclusion
 
90% of the battle with money is focusing on what we can control.

-Learning to control spending

-Keeping our debt reasonable

-Investing long-term and avoiding fear-based decision

-Becoming more valuable at our jobs to help secure income

-Having a sold savings in place.

The other 10% (or whatever that number is) is outside of our control.

These are things like politics, natural disaster, sickness, and yes viruses.

If we take care of the 90% that we can control, it will make the 10% that comes our way much easier to handle.


Thank you for reading,
Darron Rowley

Co-Founder 1911 Apparel

 

Disclaimer: This is not financial advice. This is solely the opinion of the author and does no represent financial advice. Always consult a tax or investment professional when it comes to financial related issues.