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Fear

December 3, 2012 – 6:03 pm

Fear and Greed are the primary drivers of investors. Learning to control these emotions leads to better decisions. When fear is in charge stock prices go down regardless of the health of the company, its growth rate in earnings or even its relative value. Fear will rule until it has run its course.

But here is the rub. Fear always runs its course and human nature, that nudged us to embrace fear, begins to push us to embrace greed as our rational minds begin to reassert.

Being a successful investor requires a complete understanding of this tug of war and no one can truly know the points of maximum fear or maximum greed. Therefore no one can take advantage of the maximum turning points. One can only observe and respond to overreaction.

Is that what we are seeing in the fiscal cliff? I think so. Now for the hard part: if it’s true, how or better yet, can you take advantage of it as an investor?

Good Trading
Steve Peasley

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