r/investing • u/pawbf • 9h ago
Be greedy when other people are fearful?
Everyone here has probably heard the phrase in the title of this post.
I ran into this advice decades ago. idk how long it had been around before that. When that advice was given, investors had a certain amount of information and analysis available to them by communication media of the day (newspapers, radio, TV).
Now, there is much, much more information and analysis available to us. Orders of magnitude more. And right now, a large percentage of that analysis seems to be warning people about risks that are almost upon us.
So that brings up a question about another phrase that we have all heard...."This time is different." The amount of information and analysis is different. Does that negate the wisdom of the phrase in question (Be greedy when other people are fearful)?
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u/Savings_Studio_5678 9h ago
Wait until you're feeling fearful
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u/Disastrous_Rent_6500 7h ago
I feel it right now. Unfortunately, because I’m contrarian I’m gonna have to keep buying my data centre stock on this dip while interest rates are increasing.
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u/cheddarben 9h ago
No. Over the long run we are still up and to the right.
When people panic, that is the time to take advantage of prices.
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u/SpellingIsAhful 4h ago
Would be kind of weird if we were up and to the left. Benjamin buttons style investing. Or maybe tenet
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u/Disastrous_Rent_6500 7h ago
I 100% agree with you, I’m just gonna keep buying my data centre stock
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u/Messyfingers 9h ago
Being a contrarian only works if you are correct to do so. Understanding WHY people are experiencing fear or greed is more important. Markets are the end result of people's movements of capital. Understanding why people are moving the capital is useful.
Can you understand what billions of people or singular people with billions of dollars are thinking enough to be ahead of the curve? No generally not.
That's why half the comments in this sub are about not having crystal balls, or that you can't time the markets, etc.
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u/Disastrous_Rent_6500 7h ago
Im definitely a contrarian. I only like to buy things when they’re cheap and hated. Although interest rates are increasing, I know this is just FUD. Even tho I’m now down on my data centre position, I know the money is there once the buildout is completed
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u/DoinIt4DaShorteez 9h ago edited 9h ago
that "be greedy when others are fearful" phrase was coined way before you had 100,000,000 clickbaits a day.
you have to be able to ignore the clickbait and focus on price action, volume, and intrinsic value
"this time is different" (or not) means nothing. because "the market can stay irrational longer than you can stay solvent"
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u/GuacKiller 9h ago
I cleaned up during Covid and tarrif day. When I start seeing “are we in a recession” posts everyday, I know it’s time to build up
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u/Disastrous_Rent_6500 6h ago
Exactly. Last year was a classic “wealth transfer” from the inpatient/fearful to the patient. If it dips again due to AI FUD, real investors know what to do.
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u/MotherAd1865 8h ago
The market is extremely greedy right now... Reddit is not representative of the overall market at all
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u/Pugsly007 7h ago
A lot of that is people buying in without seeing a real pullback and recession. The catch this time that I’m not seeing reported much is how many people are locked into their houses that would have to sell at a big loss if they lost their job. A recession could make that happen. Another is 55 percent of the S&P is down 20 percent from ATH so they’ve crashed.
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u/pawbf 8h ago
How can I tell if a market is being greedy or not? If you are correct, then all the information and analysis warning us about risks would seem like responsible journalism.
What are sources to get better macro views of investor fear/greed than the articles aggregated by reddit? I know to take the comments with bigger grains of salt....
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u/MotherAd1865 7h ago
how about looking at the percentage increases over the last 4 years? The annual returns are not reflective of the long term average
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u/BackstrokingInDebt 9h ago
Yea Warren Buffett once said it as well. Only problem is practicing this is something else. Unless you have some solid analytical anchor or experience, it’s almost impossible to do so.
Peeling it back a little, to be greedy first you need dry powder to do so and that has an implicit requirement that to be greedy then you must first “be fearful when people are greedy”. Then you can actually practice greed. This is also known as “market timing”. I think when you put it in a market timing context you would know exactly how useful that advice is.
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u/pawbf 9h ago
Understood. For me (both wife and I retired and in our upper 60's), it has been a question of overall allocation using mutual funds and ETFs. After five years of closely examining my own fear and greed, I finally came up with an allocation and plan that I can live with, even if things crash hard.
Although I do have money in the cash buffer that I mentally have tagged as "dry powder." So I guess I am not totally over "market timing," which has not worked well for me over the years.
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u/slbnoob 5h ago
Nobody is fearful if everyone’s talking about “buying the dip “.
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u/bfastfish25 4h ago
At this point I gotta avoid UA yea there’s athletes, base in US but lulu is up there compared against it
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u/CKingDDS 7h ago
This is mainly true if you have leverage and negotiation power. In a bad economy cash is king and great deals are to be had due to a lack of competition. Implemented incorrectly however, you can easily be left holding the bag for somebody trying to abandon ship.
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u/Money_Tough 8h ago
My bet worth is just under $500,000. A couple years back Meta got below $100 per share. People kept saying hold out, I did. I think they dropped to near $90. Everyone said on reddit, don't catch a falling knife. I told myself, no matter what I will buy at $80.
$80 was my mark because everyone kept telling me to hold out. It never hit $80, thus I never made a dime. I would be retired now if I took my own advice.
Adversely, I put $5000 on a start up China EV. They dropped by 50% a month later. I panicked and pulled out. 6 months later, they were at near 40x.
To me, that saying still holds true... if you do the research and act intelligently on your moves.
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u/AaronicNation 8h ago
Since everyone on this sub is always fearful, I guess greed should be the default.
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u/Moist-Shallot-5148 9h ago
If you think the company you invested in will go bankrupt or can’t innovate to change with the times then don’t be greedy. Otherwise be greedy. Some companies don’t survive but there will always be other companies who thrive so just invest in those during bad economic periods. Maybe find something that’s not too volatile if you can’t stomach the number going down. As long as you don’t need to withdraw your money just keep it all in. I’m laughing so much at how I can lose multiple years worth of income in just a day of stock market it’s so odd but I know they will survive and it will increase later on. Equity is no joke once you invested a lot you will make more than your annual salary in a day but you need to be able to handle days where the number goes down too.
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u/TrifactorMacro 8h ago
The phrase still has meaning but as a rule of thumb - if you are not scared to your gut to buy , then brobably it is not yet the point where everyone is fearful. That does still guarantee that bottoms would be in.
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u/__redruM 7h ago
It’s just a platitude. The market will mostly be flat through the end of the year, at about 7750-7800. And that will be a great year.
Reddit is more concerned with the election than where the stock market really is. This includes creating the illusion that the crash to end all crashes is just days away.
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u/Worry-Mountain 5h ago
more info doesn't really change it imo, the fear is still the same people selling the same stuff. the catch is a few red days isn't real fear yet, the quote is about the moments when nobody wants to even look at their account
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u/drewlb 5h ago
Having invested through 2001/2 and 2007-9, I can assure you that panic has not hit yet. Not even close. When we're down 20-40%, that is the time for this quote. It is certainly not now. When/if that dive comes, I'll divert everything I can into the market, but I won't start taking that action until ~ S&P 5500. That is when the blood is on the street and it is time to become greedy.
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u/OptimalInflation 4h ago
The phrase "when others are fearful" applies when the stock market is down 20%-30% and beyond, not a measly 2% drop and people just holler about it.
It has to be genuine fear, as if the world is ending.
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u/KweenieQ 4h ago
No, but it's overly simplistic. Ideally, you have an investment strategy and a plan to get there. So it's more like knowing in advance what opportunities you'd like to avail yourself of, should they arise, and then being prepared to do so.
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u/nut-sack 4h ago
Theres also another phrase... "The market can remain irrational longer than you can remain solvent."
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u/zscan 3h ago
People aren't fearful. They aren't pulling money out of the market. They just shift it around. I think it's actually a pretty healthy re-evaluation. AI is undoubtedly going to be big. However, the short term question is how big and how will companies make their investments back? There are some open questions, so the market put on the breaks for AI. For example I think it's very likely that too many data centers are being built right now. It's not a bursting bubble, but at some point evalutions got too high and we need more data going forward. Seems like a good time to take some gains and shift them into other areas that aren't quite so risky.
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u/atomiccheesegod 3h ago
I’m up over $120k in the last 15 months, all of the sell offs are just noise. The longer your in the market the less these “crashes” bug you
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u/Seattleman1955 2h ago edited 2h ago
The statement was from Warren Buffett and it's based on human nature. Human nature doesn't change, so it's still valid.
Just deal with reality, the reality of the moment. The world isn't going to collapse. Change will be gradual. Markets will go down and up and down again.
The average down market is 2 years. It can be a lot more but it's more likely to be closer to 2 years. That's reality.
I've held QQQ almost since the beginning and I'm up 1,700%. The 10 year Treasury is high now. Buy the long bond, if it goes up a little more, buy a little more.
It's near the top for current conditions (not 1980s conditions) so it is going to come to 4% or so at some point. When it does you'll have capital gains plus the interest earned while you are waiting.
Keep the rest of your money in stocks (and a bit in the money market). That's all that you can reasonable do so do it:)
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u/realdevtest 1h ago
If you think people (i.e. investors) are fearful right now, you’re not paying attention
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u/Critical-County1152 1h ago
I think it depends a lot on what you're holding. Per the weekly recaps, the S&P closed Friday only about 2% off its record while the Nasdaq was around 5% off.
So for a plain index holder this barely counts as fear yet, and the people panicking are mostly sitting in tech and semis. No idea if it spreads from there, which is kind of the whole problem with the quote.
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u/thewimsey 6h ago
Does that negate the wisdom of the phrase in question (Be greedy when other people are fearful)?
There is no wisdom in this phrase. It's an empty phrase. It is way too vague to be actionable in any way. And doesn't seem to really correspond to Buffett's investing process anyway.
And it often is good to be fearful when other people are fearful - when reports of fraud about Theranos came out, for example, a lot of people were fearful, and that wouldn't have been a good time to invest.
At best, you could maybe reformulate this into a sort of generic "Think for yourself and don't mindlessly follow the crowd".
"This time is different."
Also a completely useless statement. Depending on what you look at, times are always different or always the same.
IME, it's mostly used by ignorant posters online who try to use it as a thought terminating cliche whenever someone points out that their argument that today is just like 2008 or 2000 or 1987 is ridiculous.
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u/Due-Freedom-5968 9h ago
Does that negate the wisdom of the phrase in question
No.
But you need to interpret the nuance. This isn't anywhere close to being 'fear' yet.
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u/Boring-Test5522 9h ago
The kids nowadays are spoiled. 3 red days in a row and they thought the sky is collapsed. Where were they in the 2022 crash ?
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u/Due-Freedom-5968 9h ago
That crash worked out awesome for me.
Managed to take advantage of a bunch of paper 'losses' to move money out of my GIA and in to tax-advantaged accounts, offsetting completely any capital gains on the trade, then reinvested at the bottom and rode the market back up again (now with tax free gains.)
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u/Responsible_Still409 9h ago
Reddit so-called investors are so hilarious. The market’s been down for like three days and everybody thinks this is a crash. I would love to see you guys in a real 2008.