Reading? Investing Made Simple by Uncle8888 (7)
Two-Way Buying Decision
For every completed stock transaction, there are buyer/buyers and seller/sellers. You may have analysed the stock and decided it is good time to buy; but have you equally put in enough time and effort to analyse why they sell?
Never assume the market is wrong and you are right. As retail investors with limited resources, you are better off to be humble and assume that the market is often right than wrong.
To be contrarian-investor, you may dare to go against the crowd's wisdom; but you may still need to understand the cause and the reason for the sell down.
Is reward-risk ratio high enough to compensate you to go against the crowd? If not, better be humble and assume the market is right and avoid it. There will always be enough opportunities in the market.
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