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increasing amounts of money. Why ruin our excitement by labeling it greed? Can't we just say we have a healthy interest in earning as much in income and investments as possible? Sure, we can label it anything we like. |
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But for our purposes of balancing fear and greed and understanding how these motives affect our trading behavior, we must be ruthlessly truthful with ourselves. We want to understand how greed, or the desire for more, can push us to make poor decisions when we're investing online. We need to be able to identify our own thoughts and feelings of never enough, of yearning for more, and not call them something more innocent or flattering. |
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In the example I gave of my own holding back from taking a profit with Pfizer, it certainly would have been easier for me to attribute my behavior to something more benign. I could have tried to convince myself that it really wasn't greed operating but simply a lack of understanding of how dependent the stock price was on the expectations of Viagra. |
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Or, I could have tried to convince myself that Viagra is just one drug among many that Pfizer sells and that this company is far too large to rest its hopes on any one drug, no matter how popular it may have become. And there is truth to each of these assertions. But they aren't why I didn't sell when it hit 150. I didn't sell because I wanted to see it hit 160. And that is what greed is all about: Squeezing a little more juice out of the orange. |
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Is there anyone reading this who doesn't know the feeling of well-being and exhilaration upon watching a stock go up very quickly? And how hard it can be to take profits when one hopes the stock will move even higher? This feeling of never enough or wanting more profit, that no matter how much we've made, we want just a little morethis is the face of greed. And, as we said earlier, it has been a part of the human financial story in one form or another since the earliest exchange economies. |
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Even with all the fancy technology, real-time news, and everything else available, we never really have all the information that would be desirable about a company or what moves its stock price in helping us make our investing decisions. We are always being forced to use our best judgment to evaluate and make decisions, knowing we don't have all the pieces, that we are operating on limited data. Of course, this is true not only with our investment decisions but in the rest of our lives as well. This is pretty self-evident, isn't it? |
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