Friday, 27 November 2009

People are risk takers or risk avoiders by nature.

As market rises, investors tend to forget that risk is a four letter word, greed takes over, and those who once thought themselves in the conservative camp abandon caution in search of higher returns and what looks to be easy money to be made. 

But an investor's tolerance for risk is part of his or her basic personality, and tolerance for risk rarely changes.  People are risk takers or risk avoiders by nature. 

Investors and the markets are said to be rational, but most people are heavily influenced by their emotions.  The primal emotions of fear or greed often cause investors to play the loser's game of buying high and selling low.

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