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Investor Education

Be Afraid when All are Greedy. Be Greedy when All are Afraid

Markets swing between bull runs and bear runs. Buying frenzies raise risk; fear-driven selloffs can create opportunity.

“Be Afraid when All are Greedy. Be Greedy when All are Afraid.”

🐂 Bull Run — when greed dominates

In a bull run, the market mood is for buying—a buying frenzy. Be highly selective and avoid indiscriminate purchases at stretched valuations.

🐻 Bear Run — when fear dominates

In a bear run, the mood is for selling—a selling frenzy. Consider gradual accumulation of quality assets as prices dislocate from fundamentals.

Summaries

When you see Greed →
Use caution, tighten checklists, raise quality bar, keep some cash.
When you see Fear →
Accumulate slowly, focus on strong balance sheets, diversify, use tranches/SIP.

🧭 How to act

Do
  • Write a simple process (valuation bands, risk limits, position sizing).
  • Use SIP/tranches; rebalance periodically.
  • Prefer diversified funds/indices when uncertain.
Avoid
  • Chasing parabolic moves or tips.
  • Ignoring earnings/quality for narratives.
  • All-in bets or excessive leverage.

⚠️ What is a folly in the stock market?

Folly is when investors pile into a rising market despite alarming valuations—the bigger fool’s theory. The same behavior appears on the downside. Following the crowd in either extreme increases the chance of loss.

Beginners: Invest in Indices Power of Compounding

❓ FAQ

What does “Be afraid when all are greedy” mean?

During euphoric markets, prices often run ahead of fundamentals. Risk of permanent loss rises when you chase momentum at stretched valuations.

Why “Be greedy when all are afraid”?

Broad selloffs can push quality assets below intrinsic value. Gradual accumulation during fear improves long-term return potential.

How do I avoid the bigger fool’s theory?

Have a valuation and risk framework. Buy only when expected return exceeds risk, and avoid buying just because you hope to sell to someone else at a higher price.

Should I time the exact top or bottom?

No. Use checklists, position sizing, and staggered entries (SIP or tranches). Focus on process, not perfect timing.

What should beginners do?

Start with diversified index ETFs and follow a disciplined SIP. Add select stocks only after building knowledge and a written plan.

Education only. Not investment advice. Markets involve risk, including loss of capital.