Sunday , 21 July 2024

2 Surefire Ways to Make Loads of Money Investing In the Stock Market (+2K Views)

…The majority of individual investors base their investing decisions on two emotions that ruleWays-to-make-money-1 the market – fear and greed – and, as a result, end up losing money more often…[than making] money. [That being said,] if you can keep your emotions in check you can take advantage of other investors emotions –  irrational exuberance – and make yourself some easy money. It’s a surefire way to make loads of money investing in the stock market.

The original article by Jon Dulin has been edited here for length (…) and clarity ([ ]) by to provide a fast & easy read.

What Is Irrational Exuberance?

Irrational exuberance is when we as humans stop thinking clearly and allow our emotions to completely control our thoughts and decisions…This is what happens when emotions enter into our decision making process. It’s all part of behavioral finance. We get greedy and buy without thinking [and] then we get scared and sell without thinking, so how do you make money off of irrational exuberance? There are two ways.

#1. Keep Your Emotions In Check

…Learn to not allow your emotions to cloud your decision making process. Think back to all of the times when you made decisions based on emotion. I bet the majority ended poorly.

To help you keep your emotions in check, here is a quick process to follow.

  • Stop and think
    • Before you make a decision, pause for a minute and ask yourself if you are acting rationally or emotionally.
  • Step away
    • In most cases, you can clearly tell if you are acting rationally or not. Sometimes, [however,] emotions present themselves as rational decisions so you should step away for a few days before coming to a decision.
  • Review
    • After a few days have passed, and you [have] had time to think things through, what conclusion do you come to? Is it the same one?

Many times by stepping back and thinking through issues, we allow ourselves to get control and make smarter decisions that are not based on emotion.

#2. Do The Opposite Of Others

…When everyone – and I mean everyone – is telling you to invest in something, this is your sign that irrational exuberance has taken hold and you need to do the opposite. If you own what is hot, this is your cue to sell. If you don’t own, this might be a good time to short whatever it is that is hot…

The caveat here is that you will never be able to time the market perfectly. You might get lucky and sell at the peak or buy at the low, but odds are you won’t…The key here is looking longer term. You aren’t looking to double your money overnight. You are looking to make a large amount of money in a short period of time, say 1 to 2 years.

Final Thoughts

[What I have presented above should be]…your action plan…[on] how to take advantage of irrational exuberance. Like I said at the start, it is easy to do. All you have to be able to do is keep your emotions in check. If you can do this, there is no reason why you can’t be making money while others are losing their shirts…

Scroll to very bottom of page & add your comments on this article. We want to share what you have to say!

Related Articles From the munKNEE Vault:

1. Improve Your Decision Making Process & Keep More of Your Money – Here’s How

You might be thinking what behavioral finance is and how you can improve your decision making process and use behavioral finance to your advantage. Well in this post I am going to show you how.

2. Recognize These 6 Emotions Before You Buy or Sell an Investment

Since there is such a wide range of emotions, it might be helpful for you to do a ‘gut-check’ before you actually buy or sell any type of security. Knowing how you “feel” about investing might turn out to be just as important as knowing what you “know.”

3. 10 Investment Mistakes Even Skilled Investors Make

Many mistakes and pitfalls cause investors, both rookies and experts, to lose money in the markets. By fully understanding and genuinely acknowledging these mistakes, you are a step further to achieving consistent gains from your investment portfolio. [Here are 10 such mistakes that come to mind.]

4. Time the Market Using Momentum Indicators

Never again will you have to rely totally on the ‘advise’ of your broker. With what happened last year to most portfolios it is imperative to do ones own analysis and be in a position to become better informed. If ever there was a “cut and save” investment advisory this article is it.

5. Yes, You Can Time the Market – Use These Trend Indicators

Remember, the trend is your friend and now you have an arsenal of such indicators to make an extensive and in-depth assessment of whether you should be buying or selling. If ever there was a “cut and save” investment advisory this article is it.

For all the latest – and best – financial articles sign up (in the top right corner) for your free bi-weekly Market Intelligence Report newsletter (see sample here) or visit our Facebook page.