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Thursday, 20 January 2011

Market Behaviour: The Least You Need to Know

Warren Buffett mentioned that an intelligent investor will require good knowledge in two subjects.  These are:
  1. having a good understanding of market behaviour and 
  2. mastering the valuation of different assets.
Understanding market behaviour is important as this allows the intelligent investors to take advantage of and not to fall victim to it.
  • What are the types of market behaviour the intelligent investors may encounter?  
  • How should you approach these market conditions?  
  • How can you take advantage of these through your buying and selling of shares?
As a value investor, understanding the market behaviour can be rewarding.  At least you need to know:
  • Bull markets tend to be good times to take profits on stocks you're ready to sell.
  • Bear markets tend to be good times to find great buys because so many stocks are on sale.
  • Get yourself under control and learn to move at your own pace, not the pace of the crowd.

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