Investing 102

[GregWeld]

I just read a stock market report on China - and what has been happening to that market in recent weeks. Seems that 85% of the market is "retail" investors (what we are) and that much of the market is speculation and "margin" buying. With their market selloff - down some 25% in the last couple weeks... many are now only waiting for the market to climb back to "even" before they get out. My bet would be that they'll bail before that - and thus lock in their sizable losses.

My point? Retail investors buy high and sell lower... they fail to understand the risks... and pile in with ever more capital (borrowed when it's margined) when things are going their way... and bail the minute it's not. They're not "INVESTORS" -- they're gamblers. Idiots really... because the ones with the most to loose are probably in the deepest financially... and understand what they're doing, the least.

This all reminds me of the housing market crash here - which also sent the stock market reeling. Borrowing money on their houses - refinancing every other day - buying stuff that depreciates (pro touring cars.... LOL).. and generally living large on money they don't have. That is a recipe for the disaster it eventually became. Don't be "that guy".

The people that stayed in the market - either with houses or the market - eventually did just fine. Those that sold did not. Those that stepped in and bought from the losers (weak handed sellers) - did even better! Be that guy!