4Settimana·

The psychology of the stock market: hype, risk and conviction

$IREN (+11,25%)
$BMNR (+3,32%)
$ONDS (+3,62%)
$CIFR (+17,08%)

Observation: The shift from reason to hype

A clear shift in posted purchases has been visible in recent weeks:

- Current: More and more hyped stocks are being bought, some of which have recorded enormous gains of over 200% in recent months. This points to the phenomenon "Fear Of Missing Out" (FOMO) phenomenon, in which investors invest in stocks that have already risen sharply for fear of missing out on a quick profit.

- 12 months ago/April: Back then, posts about buying ETFs or other established, "well-known" stocks. Such investments often represent a long-term, diversified and more rational investment strategy.

Lesson: The risk of momentum speculation

This development is a classic sign of a speculative speculative market phase. It is crucial to understand: Share prices that rise quickly can fall just as quickly.

- Momentum risk: Buying stocks based solely on their recent price increase (momentum strategy) is extremely risky. These stocks are often highly valued and extremely volatile.

- The slump: When the trend reverses, the initial enthusiasm can quickly turn into panic selling turn into panic selling. Without a strong, rationally based investment mindset, the so-called conviction, it becomes extremely difficult for investors to hold on to these shares as soon as they enter a correction phase. correction phase or a downward trend downtrend.

- The lesson: Real conviction in a share is based on a thorough analysis of the company's value. company valuenot just on the latest share price performance. Speculating on short-term hype feels "fun" as long as it's going up, but can lead to painful losses when it crashes. can lead to painful losses lead to painful losses.

Conclusion:

Stay rational and remember: Diversification and a long-term perspective are the foundation for sustainable success on the stock market.

Best regards

Bubu 😉

29 Commenti

Christoph@rostnagel

4Settimana

He's right about that. I haven't suffered any major losses yet... That's why I'm curious to see how I'll behave. The market movements have been scary. I'm expecting a major correction soon.

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All-in-or-nothing@All-in-or-nothing

4Settimana

And then you discover in your split portfolio a sale for $IREN and an existing position (with little current profit, so jumped on the Fomo bandwagon late) and a partial sale at $NBIS, what do you say dazu🤷🏼‍♂️🤭😂.

Edit: and btw there are at least more buys posted here, which doesn't mean that everyone here is suddenly throwing their strategy completely overboard and suddenly unreasonably throwing everything they have into high growth bets. But there are fewer posts about boring stocks, ETFs or whatever else, which is in the nature of things😉.

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Dividendenopi👴@Dividendenopi

4Settimana

The people here who trade "hype stocks", and the emphasis is on trading, are for the most part well aware of the risk and can deal with losses. Those who have caught the trend in time achieve an outperformance for the moment, the fomos who enter after a setback should not expect 100 or 200%, but are satisfied with a bounce of 10 or 20%. Unfortunately, the small remainder will probably fall by the wayside, with the knowledge that they will have to act differently next time. Yes, we are in a highly speculative phase with all the opportunities and risks. Long-term wealth accumulation looks different, the current profits can be a good basis for building up capital in the short term. Or the brutal lesson at the beginning of the journey. 🤷‍♂️

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Chris@Multibagger

4Settimana

You spoke a lot of truth there. For me, I exclude Fomo because this high-risk momentum strategy is my day-to-day business and I do virtually nothing else, OK except for a few small caps that I believe will perform above average. But of course that won't be the case for everyone.

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TomTurboInvest@TomTurboInvest

4Settimana

True words! There have always been phases like this, and they always come back, and there are always a few people who know what they are doing and a few others who are copy trading and trading out of FOMO. For which group this has always come to a bitter end in the past is, I think, obvious anyway 😅

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Mark777@Mark777

4Settimana

@TomTurboInvest man nennt es Tiktok Trading.

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Dirty30@Dirty30

4Settimana

Bitmine correlates with the ETH price. ETH is at the 54 level in the weekly RSI and is therefore bobbing around somewhere in the middle of nowhere. So if you are currently noticing hype and fomo, wait and see what will happen here on the platform in November 😁

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Wravo@Wravo

4Settimana

@Dirty30 Nobody is saying that a correction is coming in November, but a comment like this is a good indicator of what is meant and nobody knows how long it will go up

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Dirty30@Dirty30

4Settimana

@Wravo the correction is coming in mid-November, see my last post. You collect data from various indicators and take the best possible position on the financial market. That's all it is.

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Chris@Multibagger

4Settimana

@Dirty30 that means going fully short from 05. or 10.11.? If that's safe, I'll do it. I have no problem with that 😉.

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Dirty30@Dirty30

4Settimana

@Multibagger not investment advice 🤣 The cycles are nevertheless interesting. If you look closely at the chart, you can see that after the downward turn of the 80-day cycle, there is usually a higher high, i.e. the 2nd high of the 30-day cycle. This would be around the 13.11., so to speak. In the last few cycles, there was also a final higher high at the end of May and in mid-August, before both cycles point downwards together.

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Chris@Multibagger

4Settimana

@Dirty30 Which graphic do you mean? Must have slipped through.

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Dirty30@Dirty30

4Settimana

@Multibagger the ones with the 30 and 80 day cycles in Bitcoin. From my last post yesterday.

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Chris@Multibagger

4Settimana

@Dirty30 but that was about $BTC and $ETH, wasn't it? Doesn't that mean a general down for shares?

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Dirty30@Dirty30

4Settimana

@Multibagger Normally, even they move in a similar way. In this case, however, the crypto sector fits, because Bitmine was mentioned in the article and thus indirectly also ETH.

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jkb92@jkb92

4Settimana

Watch out, at $IREN dip-FOMO again haha

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Mark777@Mark777

4Settimana

That leaves only one stable candidate $VWRL

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TradingHase@TradingHase

4Settimana

I think those who are absolutely convinced will stay in even during correction phases. If you only hope for a quick profit and realize it early enough, you haven't done much wrong.
However, the conviction should come from a good analysis if you want to stay invested in the long term.

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Bubu@Bubu_98

4Settimana

@TradingHase and do you also sell in the minus if the share goes into the minus on a trade? 🤔

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TradingHase@TradingHase

4Settimana

@Bubu_98 Yes, I've learned through mistakes that there are times when you have to let go 😉

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Patschke6686@Patschke6686

4Settimana

nice Franconian beer - running =)

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Bubu@Bubu_98

4Settimana

@Patschke6686 Prost 🍻

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Patschke6686@Patschke6686

4Settimana

@Bubu_98 Knock yourself out, cheers!

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Olli@Olli68

4Settimana

Beautifully written 👍

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Bubu@Bubu_98

4Settimana

@Olli68 danke 🙏🏽

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José@Balance_seeker

4Settimana

Quite wise insight. FOMO is always the enemy of a wise invester. Furthermore the Bull market is showing cracks. The Bear is knocking on the door. All this IA hipe is resembling the advent of the dot com crash again.

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DuarteSousa@DuarteSousa

4Settimana

Good point and good pint 😉

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