Stocks are the only item that people are more interested in buying when they are high priced and less interested in buying when they are low priced.
Think about this. Do you ever go to the grocery store and buy something that is four times the normal price or don't buy because it is a quarter of its normal price? Sounds funny, right?! But that is exactly what many people do when they buy stocks. Often these actions are the result of the herd effect and fear of missing out (FOMO).
The herd effect is when people follow the crowd because everyone else is doing it. Buying toilet paper is a perfect example of the herd effect in the current Covid-19 environment. There must be people who have toilet paper stacked ceiling high in their living room. They probably have enough to last 40 years!
FOMO is often seen in sales people's pitches. "This deal is only being offered for the next ten minutes." or "The demand is outstanding! We unlikely to have any more by tomorrow." My first thought when I hear those “pressure pitches” is to check to see if my wallet is well secured in my pocket.
Remember to buy your stocks like you buy your groceries. Get good value for what you pay.
Be smart, be well-read and be successful.
