“Be greedy when others are fearful”

By | November 9, 2016

be-greedy-when-others-are-fearful-dividends-down-under-blogAuthor: Mr and Mrs DDU.

Someone you may have heard of once said “Be fearful when others are greedy and greedy when others are fearful”.

It is in unexpected times like this where the share market suddenly puts a lot of great businesses at discount prices, even though they’re the same businesses as they were the day before.

If we had tons of cash sitting there to invest, we’d be licking our lips. We could use this volatility to grab some bargains. Sadly, we don’t have anything laying around, oh well.

In time, today will be just another day in the stock market. This will pass. In the long run, the stock market will (hopefully!) keep growing. But in the short term we could be in for a rollercoaster, it will be interesting to say the least.

 

What are your investing thoughts about the volatility after the US elections?

46 thoughts on ““Be greedy when others are fearful”

  1. Luke@dollarwise

    I agree, a big dip in the market and a great opportunity to pick up good stocks or just buy an index or LIC. I did buy in a bit today. I trust in a years time it will all be a distant memory! Luke.

    1. Dividends Down Under Post author

      Hey Luke,

      Good to hear you took the opportunity to get a discount yesterday. Today it seems like everything is forgotten again – the market is a temperamental beast.

      Mr DDU

  2. Full Time Finance

    I think your looking at a day or two dip and opportunity. After that things will settle back to normal at least until the market understands what a Trump presidency means. I will be investing a small pittance today.

    1. Dividends Down Under Post author

      Hey FTF,

      The market doesn’t know whether to be happy or sad! I think you’re probably right, the next month or so will be quiet. Then we’ll see what happens. Interest rates may go up after all soon.

      Mr DDU

  3. Mr. PIE

    Today is not a day the vast majority of Americans are thinking about money. No, today is when I think about how to explain to my children that the country they live in and will grow up in voted for a person with beliefs and policies that are not aligned with what actually built America. It’s a sad sad day for many including my family. That is all I am thinking about. That is all I am worrying about. Money means very little today. The PF community will say that loud and clear today.

    1. Dividends Down Under Post author

      Hey Mr PIE, I hope that after what Trump has said so far in his victory speech and the subsequent comments about keeping some of Obamacare will mean his presidency won’t be quite as bad as what it seemed like it might be, or what people are fearing.

      Anyway, Warren Buffett is confident about America’s long term success so I’m sure whatever happens it should be okay long term.

      Mr DDU

      1. MrSLM

        +1 to Mr Pie’s comment.

        I’m not American, but it was still sad to watch someone run a campaign centered on fear, hate, and exclusion, and win.

  4. Vivianne

    I guess, there is no big market drop here. There are too many people waiting on the sideline with cash. But overnight, I’ve heard oversea’s markets were down sharply. I hope you get to scoop up some.

    1. Dividends Down Under Post author

      It looked like the market was going to drop by 5% initially but it rose back up to its original price and ended up. We didn’t end up buying anything because we didn’t have any spare cash at the time. Oh well, maybe next time.

      Mr DDU

  5. earlyretirementnow

    Great point! Last night (or early morning today) when the S&P500 Futures dropped by 100+ points (~5%) would have been a good time to buy. Today’s open looks like there wasn’t a contested election with a surprising result. The window for utilizing the ostensibly bad news gets shorter and shorter. After the Brexit the market was down for 2 days and then recovered. It looks like the S&P is now back to positive for today and the fear lasted only for a few hours overnight. Who knew???

    1. Dividends Down Under Post author

      The market is a truly puzzling thing. There may still be further opportunities as Brexit has not happened yet, nor is Trump the president. You’d think the market would have reacted a bit more uncertain towards Trump at this point though?

      Mr DDU

  6. Charlie

    There appear to only be pockets of opportunity. My guess is the other shoe may drop once the new government is finalized.

    1. Dividends Down Under Post author

      I agree Charlie, Obama is still the president for a couple of months. Once Trump starts implementing some policies, the market may get a bit rocky at that point, perhaps. Or maybe not. We’ll just have to see 🙂

      Mr DDU

  7. Tawcan

    The markets didn’t drop as much as I anticipated. Will continue monitoring for an entry opportunity.

  8. Martin - Get FIRE'd asap

    From all accounts, the dip was minor in most markets and rallied pretty quickly. So much for the ‘experts ‘ predicting a 5 to 10% fall. Could be early days though.

    1. Dividends Down Under Post author

      Yeah totally, Martin. I was hoping for a bit more of a drop for some excitement – it wasn’t to be! (yet).

      We have our eye on December when the Fed may do a rate rise. Could be fun then 🙂

      Mr DDU

  9. Go Finance Yourself!

    Great advice! I thought more people would be fearful today with Trump winning and sell out of equities. I guess too many people read your advice!

  10. Mustard Seed Money

    I was licking my lips at 1 am EST in the US when the Dow was down 900 points in pre-market trading. However by the time the market opened in the US at 930 EST it was up 40 points and closed over 200 points. I have a pile of cash ready to buy on the dips as well 🙂

    1. Dividends Down Under Post author

      I know! How sad was it when the market didn’t end up giving a discount. It’s amazing how undecided the market could be about something.

      Mr DDU

  11. Andrew

    Great post! Like many, I was salivating as U.S. dropped on Trump’s surprising upset. To my dismay, the market completely rebounded! And the Dow hit all time highs today! Oh well…there will always be opportunities. Just have to be patient!

    1. Dividends Down Under Post author

      Goes to show how quickly the market can change doesn’t it? You have to jump on those opportunities sometimes. I hope you can get a piece of the action next time around.

      Mr DDU

  12. wealth from thirty

    What I would give to have had surplus cash to invest too! At least you both saw it as an opportunity! The ‘market’ has already ‘recovered’!

  13. Amber tree

    Things can go so different in so little time… I was planning to take someprofit in my gold mines… By the time I could get online, it looked like all was good and positive in the US… weird animal, that Mr. Market

    1. Dividends Down Under Post author

      The market is schizophrenic about whether to like this or not. Now gold is down a fair bit. Who knew? There are still many months (and years) of Trump though, I’m sure some of it is going to be a rollercoaster.

      Mr DDU

  14. Graham @ Reverse The Crush

    I haven’t made any moves since the election, but I normally like to add to my portfolio in volatile times. If everything works out with this job opportunity then I should be adding to the portfolio again soon. I definitely agree with the phrase “Be greedy when others are fearful” though. Hope you are having a great weekend 🙂

    1. Dividends Down Under Post author

      It’s okay for opportunities to pass us by sometimes, as long as we’re building for the next one 🙂

      Good luck for the job Graham!

      Mr DDU

  15. Josh @MoneyBuffalo

    One of the investment letters I subscribed to predicted deflation with Trump & inflation with Hillary. So far the market has only risen, but, it is still a long time before January and even longer until 2020. Like others, I am waiting to make some additional purchases watch the markets drop again. I’ve been surprised they have continued to rise like they have.

    1. Dividends Down Under Post author

      You’re right Josh, his presidency hasn’t even started. There’s a very, very long time for him to run the country. I’m sure it’s not going to be a quiet one, that’s for sure.

      Mr DDU

  16. Michael

    Honestly, I don’t pay attention to elections and their short term impacts.

    Whenever there is a bad day, when the S&P 500 index or Dow Jones goes down by 1% or more, I go in and buy into the market index.

    In fact, I only purchase when market indexes are in “red”. It does not make any sense for me to buy in on a day when the market is going up. It took a lot of time for me to form this habit and it is totally worth it.

    1. Dividends Down Under Post author

      Hey Michael, well you probably weren’t able to profit this time because the market recovered so quickly. I’m glad you have a good tactic sorted though – it sounds good to me 🙂

      Mr DDU

  17. DC @ Young Adult Money

    To be honest it seemed like the volatility was short-lived. A dip at first, yes, but a quick rebound. I think the important thing for 20- and 30-somethings to remember is that they have a LONG time horizon. Don’t let any one week, month, year, or even years force you to change your overall approach.

    1. Dividends Down Under Post author

      Very true DC, everyone should invest for the long term and it doesn’t matter what happens today or this year. But, like Michael pointed out, it’s nice to buy things when they’re a bit cheaper as opposed to more expensive.

      Mr DDU

  18. DivGuy

    Government usually don’t have much impact on the stock market over the long run. No matter who much we can hate or like Trump, he will not change the face of the world in the next 4 years. Many Americans were awaiting Obama like a saviors and while he wasn’t bad, I don’t feel he changed the USA that much with 8 years of work. Before Obama, Bush had supposedly put the U.S in the biggest hole possible. Yet, here were are 8 years after the market crash with a flourishing stock market… This is the sad reality; Governments have little to do with the stock market.
    This is why I’m buying when I have money, no matter where the market is at. A good company will always be a good company 🙂

    1. Dividends Down Under Post author

      I completely agree, in the long run it won’t matter much, but I’m sure there will be some bumps along the way. From what Trump is saying so far, it doesn’t seem like he’s going to be as game changing a president as it seemed.
      You’re right, a good company will always be a good company, hopefully we have just bought a good one 🙂

      Mr DDU

    1. Dividends Down Under Post author

      I agree with you Jeff – he’ll be better than what people fear and not as good as what other people were hoping for – as he’s already said a few things he’s not going to do.

      Mr DDU

  19. Finance Solver

    I was hoping SO MUCH for the markets to be down for longer, just like Brexit. I expected a day or two of selling but only futures were sold and everything was back on course after the election. Bummer 🙁 good thing I didn’t do anything in anticipation of the election!

    1. Dividends Down Under Post author

      I know right? How quickly things turn! At least we all knew it WOULD have been an opportunity if we could have jumped on it. Oh well, I’m sure there will be more opportunities in the future!

      Mr DDU

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