- And people become afraid when they start to lose money, their judgment becomes impaired.
- And the unsuccessful investor is best friends with hope — and hope skips along life’s path hand-in-hand with greed and fear when it comes to the stock market. Once a stock trade is entered, hope springs to life.
- In other words, there are millions of minds involved in the stock market, these minds form decisions based on the two main emotions in the stock market: hope and fear — hope is often generated by greed — fear is often generated by ignorance.
- When stocks decline swiftly, and abruptly, they are being driven by fear. When they rise they are being driven by hope. If people are hoping a stock will rise they are slower to sell. If they fear the stock will decline they are usually fast to dump that stock. That is why declines produce faster, more abrupt market action.
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