Jump to content
House Price Crash Forum
Sign in to follow this  
BillyShears

A Common Pattern?

Recommended Posts

One of the reasons I am hesitant to invest in things that are risky is the following possibility, which I think is what people are referring to when they talk about the monkey with its hand in the jar.

Let's say that I through caution to the wind an buy some gold. Say I keep it to a tiny investment of say 1K or so. Then gold prices go up a big. "Oh goody" I say "I'm rich". So I go out and buy another 1K of gold. Gold prices go up again, more than the rest of my money. "I'm losing out" I think, and start buying more gold. Up goes the price again. So I liquidise everything and it all goes into gold. Up goes the price again. "I'm rich I'm rich HAHAHAHAHAHAHAHAHAAH". The price goes up again. I start expecting price rises, and start selectively reading news, taking positive news at face value and discounting news that's against it. Up goes the price, up, up, up and CRASH!!!!! And I'm screwed.

A common beginner's error?

Billy Shears

Share this post


Link to post
Share on other sites

I can sympathise with those concerns. I'm new to investing myself and am only just beginning to wean myself off the 'put everything safely in the building society' mentality. In the past month I've seen how just a fraction of my savings in silver can overtake the returns I get on the whole of the rest of it in my savings account and I'm asking myself why I don't just throw the whole lot in there. I have to tell myself it could easily have gone the other way but it's difficult to take that to heart. Greed kicks in and makes it difficult to stick to sensible plans you might have made.

Someone on this forum (Bubb I think) said it can be a good thing for a person to lose a bit of money when they begin investing and that makes sense because on an emotional level it's probably useful to learn a bit of fear to balance out the greed.

Share this post


Link to post
Share on other sites

One of the reasons I am hesitant to invest in things that are risky is the following possibility, which I think is what people are referring to when they talk about the monkey with its hand in the jar.

Let's say that I through caution to the wind an buy some gold. Say I keep it to a tiny investment of say 1K or so. Then gold prices go up a big. "Oh goody" I say "I'm rich". So I go out and buy another 1K of gold. Gold prices go up again, more than the rest of my money. "I'm losing out" I think, and start buying more gold. Up goes the price again. So I liquidise everything and it all goes into gold. Up goes the price again. "I'm rich I'm rich HAHAHAHAHAHAHAHAHAAH". The price goes up again. I start expecting price rises, and start selectively reading news, taking positive news at face value and discounting news that's against it. Up goes the price, up, up, up and CRASH!!!!! And I'm screwed.

A common beginner's error?

Billy Shears

You are absolutely right Billy. I have been doing exactly that (with gold) and it occured to me lately that averaging up is a lot more dangerous than I originally thought. My profit would afterall be wiped out with a fall just half the size of the gains made since making my first purchase. That is due to the fact that I buy the same amount every time gold goes up another $25. I now wish I had splashed out at the start, but then that would have been very risky at the time.

Share this post


Link to post
Share on other sites

Join the conversation

You can post now and register later. If you have an account, sign in now to post with your account.

Guest
Reply to this topic...

×   Pasted as rich text.   Paste as plain text instead

  Only 75 emoji are allowed.

×   Your link has been automatically embedded.   Display as a link instead

×   Your previous content has been restored.   Clear editor

×   You cannot paste images directly. Upload or insert images from URL.

Loading...
Sign in to follow this  

  • Recently Browsing   0 members

    No registered users viewing this page.

  • 301 Brexit, House prices and Summer 2020

    1. 1. Including the effects Brexit, where do you think average UK house prices will be relative to now in June 2020?


      • down 5% +
      • down 2.5%
      • Even
      • up 2.5%
      • up 5%



×
×
  • Create New...

Important Information

We have placed cookies on your device to help make this website better. You can adjust your cookie settings, otherwise we'll assume you're okay to continue.