Greed (like fear) is a science. Modern greed builds entitlement and self interest in the name of Ayn Rand’s ‘Virtue of Selfishness’ morality, yet you can take advantage of this very human weakness.
“Buy fear, sell greed” is often quoted advice from Warren Buffett prophets and other occasional billionaires on MSNBC; because the core idea behind it is simple – emotion drives behavior. This is a rule every good sales man/woman knows, as do politicians,… and the casinos in Las Vegas and Wall Street.
But why? Why does emotion often fly in the face of obvious evidence grounded in verifiable facts?
It’s a never ending question with as many answers as scenarios. One of the most popular modern ones is Fear Of Missing Out (FOMO)… and the most often used example is Bitcoin (BTC) that went from .03 cents in 2009 to nearly $20k in late 2017 only to sink to under $3,500 just a year later; then back up to $12,500 by July 2019; and over $65k in late 2021. Roller coasters like this have created hundreds of Bitcoin obituaries and an army of non-objective (but entertaining) bears and bulls on social media.
Speculation driven by free/fear markets that pay whatever someone is willing to buy an asset for starts with the buyers expectation of future returns – which are often driven by belief systems grounded in emotion… Understanding this behavior requires tools like the BS Detection Kit, behavioral finance and SoS, to help separate the wheat from the chaff.
With these thoughts in mind head over to our signals analysis page to find tools such as the “Fear and Greed Indexes” which gauge the mindset of major trading markets; and of course there is a pure crypto one at Alternative.me. Another resource is rabbit hole marco research compliments of Axel Merk and the good people at Merk Investments and sage advice over at the Motley Fool. Finally, we have even more links in the financial resource section on our tools and training page.
Ayn Rand Picture: https://en.wikipedia.org/wiki/Ayn_Rand