The public are always wrong

article originally from FMZ.COM

Bernard Baruch was born in 1870 in South Carolina and graduated from the City College of New York. Baruch is a successful example of starting from scratch and a stock trader who is good at grasping opportunities, as well as a flexible investor, also a politician who is familiar with economic development, investing in ghosts and speculative masters.

Baruch proposes to pay attention to three aspects of the investment object: first, it must have real assets; second, it is better to have a franchise advantage of operation, which can reduce competition, and the way out for its products or services is more assured; The third and most important is the management ability of the investment target.

Baruch cautioned that he would rather invest in a company that has no money but is well managed, and don't touch the stocks of a well-funded but poorly managed company. Baruch also paid considerable attention to the control of risk. He believes that it is necessary to keep a certain amount of cash in the hands; it is recommended that investors must reassess their investment at intervals and see if the stock price can still meet the original expectations. He also reminded investors to learn to stop loss: the mistake is inevitable, the only choice after the mistake is to stop the loss in the shortest time. Baruch did not agree with the so-called excess returns, and he cautioned against trying to buy at the bottom and sell at the top. He said: "Whoever says that he can always sneak into the top, it is a lie." He also reminded investors to beware of so-called insider information or hearsay, and investment mistakes are often cast into it. Therefore, some people blame Baruch for thinking that one of the reasons why he was called a “speculative master” was his seemingly desperate style.

"The masses are always wrong" is the first essence of Baruch's investment philosophy. Many of his deep understanding of investment are derived from this basic principle. For example, Baruch advocates a very simple standard to identify when it is the low price that should be bought and the high price of the sale: when people cheer for the stock market, you must sell decisively, regardless of whether it will continue to rise or not; when stocks are cheap enough that no one wants, you should dare to buy, regardless of whether it will fall again. People are often surprised by Baruch's judgment and his ability of grasping the fleeting opportunities.

He believes that any so-called "real situation" in the stock market is indirectly conveyed through people's emotional fluctuations; in any short period of time, the rise or fall of stock prices is mainly not due to objective, non-human economic forces or Changes in the situation, but because people react to what is happening. Therefore, he reminds everyone that the basis of judgment is understanding. If you understand all the facts, your judgment is correct. On the contrary, your judgment is wrong. In all aspects of the public's psychological understanding, Buffett and Baruch are exactly the same. Isn’t that Buffett always say you have to shrink your hands when the public is greedy, and to be aggressive when the public is afraid? The two masters have many similarities in the investment philosophy.

Baruch’s investment approach is more flexible and he advocates stop loss firmly. He said that if investors have the awareness of stoping loss, even if they only do three or four times every ten times, they will become rich. He wants investors to have plan B so they can turn around and leave at any time. Buffett seems to be more assertive and don’t change the investment plan easily that has been formulated. He said: "If you can't carry out the plan with ease after the stock price has fallen by half, then you are not suitable for stock investment." What can be done is that Buffett is cautious in choosing stocks. In this way, Buffett is like a well-trained Tai Chi master, and Baruch is more like a swordsman sealing the throat.

The basic qualities that investment and speculation must have:

1. Self-reliance. Must think independently. Avoid emotionalization and remove all environmental factors that may lead to irrational behavior.

2. Judgment: Don't let go of any details - think for a moment. Don't let what you want to happen affect your judgment.

3. Courage: Don't overestimate the courage you might have when everything is bad for you.

4. Agile: Good at discovering all the factors that may change the situation and the factors that may affect public opinion.

5. Cautious: Be easy, otherwise it is difficult to be cautious. When the stock market is in your favor, you need to be even more modest. It is not a cautious act when you think that the price has reached the lowest point; you’d better wait and see, it is not late to buy later. It’s not a cautious act to wait until the price rises to the highest point – it’s probably safer to get out of the hand.

6. Flexibility: Consider all objective facts together with your own subjective view. It is necessary to completely abandon the attitude of stubbornness – or “self-righteousness”. The idea of earning a certain amount of money over a certain period can completely ruin your own flexibility. Once you decide, act – don't wait and see what will happen to the stock market.

The psychological literacy that must be possessed by investment and speculation:

Almost everyone can't escape being controlled by their own emotions: they are either too optimistic or too pessimistic. After you have mastered the objective facts and formed your own opinions, please watch the trend. You should know what should happen in the market, but don't mistake it for what will happen in the market. The more the public intervenes in the stock market, the greater its power. Don't try to work against everyone, and don't stand too forward. If it is a bull market, of course, don't sell short. However, if there is a possibility of reversal or if you are worried about holding stocks, you will not be able to stay for a long time; vice versa.

When the stock market panics, the best stocks don't expect to sell a reasonable price. Pay close attention to all things that inspire or horrify the public. When the stock price climbs, considerate comprehensively what will make it climb higher. On the contrary, of course, you must also think about it. Don't forget history. The same thing when the stock price falls. Pay attention to the mainstream, but no need to have too many companions.

"Stop the loss and let the profit continue." Overall, the action should be fast. If you can't do this, please reduce your intervention. In addition, please reduce the intervention once you have doubts. After making up your mind, you should act immediately, and you don't have to consider the market reaction. However, when planning, you must consider the market trends from time to time.

Compare the two with a full understanding of past conditions and a comprehensive grasp of the current situation. Psychologically prepared for all obstacles, and excessive action will always lead to overreaction.

Unpredictable ingredients: The “opportunity” factor needs to be considered and you need to be prepared in financial, mental and physical factors.

article originally from FMZ.COM

It is not the Public, it is about you, that you learn to understand the market, in which direction it is directed, how to operate it, the news and what others say has nothing to do, it is about starting to understand the market , emotions mostly influence a lot.

I would not think too much about the public because they don't have responsibilities in my life. And if somehow, I need to make a decision, I will make research for a while, find the answer that I thought will be good for me and execute it and make a note for the result. The public is free to speak their opinion, but the final decision will be in yourself. So you don't have to follow or depends on the public, and it's better to do with what you believe.

I would like to mention at the beginning of my comment that I want to write my own thoughts without reading the entire article. First of all I would like to point out that if the market expects a new uptrend or a downward trend, we can be sure that the move will occur in the opposite direction of expectations, because not all people can make money from the market at the same time. Someone must lose money so that another investor can win the lost money. On the other hand, I would like to point out that it is not very accurate to make generalizations in this area, so each individual fails with his own wrong decisions. Even if the individual is acting in line with the recommendation of another investor, the individual himself has failed because the individual has taken his own decision and follows the recommendation. While this situation is obviously perceived as failing because of the fact that the public will continue in the form of a chain, each individual has failed individually due to his own mistakes.

That is truth and we are to invest by doing personal analysis of the market and even if the public is saying different things and your indicators or gut is telling you different things? Please follow your own analysis as the public are always run.

If the so called "Public" is 'always' wrong then how do you think that there people becoming millionaires by investing in bitcoin.
It's obvious that not everybody is a millionaire but some are. So it depends on a person on how is he investing and at what time.
If the strategy is right then he will surely gain profits. There is no perfect trader and everybody has failed at some point of time.
The 'public' might be wrong some time but learning a lesson from failures and trying until we succeed is a thing that real trader does.

In trading, you must have your own personal technical analysis and don't rely on them, the public as what you've said was always there that might be having a different perspective in the trading strategy. Ain't know maybe some others claiming their selves as an expert in a trading analysis. My point here is to become an independent way of having trading analysis, depth research, using tools and references is a guide on you to minimize the failure/losses on trading.

Public views are sometimes the most general perception on a particular feature,and in no way should you accept it wholly and inculcate it in your dealings by allowing it to direct you
The public could be spreading fake informations,thats why you have the opportunity to make your own research,and cover grounds yourself in soliciting for beneficial informations you feel are correct and hold no sentimental views

You/We cannot stop the public to give whatever they want to give their different opinions. You can only listen or read to their speculation but of course the final decision will still be in our hands. Meaning, if you learn a lot here it is all because of your choice decision not the public itself the reason why you learn here. But you can get an idea about their own opinion of course then you can analyze it.

Quote from: omonuyak on February 16, 2019, 03:06:02 PM

We should not perceive it as we read it. I mean, sometimes right, sometimes wrong.
For example, not thinking as a community when BTC was first created made some people millionaires.
But, think about technical analysis. If you do not analysis price as others, you will probably lost.

The problem is the public is divided by now. Speculations are so many out there left and right. They cannot decide whether it is the right time to sell or buy.
It may be a good thing or could be a bad thing.
That is also why trading had been profitable. Many are stubborn by now and also there are some who panics quickly which makes them HODL or sell in an instant.
Those factors can affect the whole market also.
It cannot always be just technical analysis. You must also be updated with the trend although you must not believe it always.
As a trader it had always been a difficult choice to whether sell or buy.

I must say the public will always make positive and negative news into something and if you will depend on that, you will be put at the wrong place. Trading should be base on your decision comes from the research you’ve than, its not about the public is always wrong, its about how you deal with those news and used it to help you decide on your trading.

This is not a thing for "traders" because it is more of a long term system. Hell even when dude was alive there was no "trading" and only investment because everything was an investment. So, if we follow these rules it would help us at least in 6 months if not in years. The people who did investments into stocks and companies in those days it usually only returned your investment with profits or even if there was no dividends it returned with the company you invested getting bigger and bigger.

Hence, if you want to put these knowledge into bitcoin you will not get the results you are looking for because bitcoin is not a company and it doesn't work the way what this guy invested into. If you go into bitcoin or trading in general with the mindset this dude invested then you will lose mostly.

Warren and Baruch's philosophy is right because they think it's right. In the stock market, or the crypto market, there is no right strategy. Because each investor has a specific standard, a specific thought and wants to get different levels of profit. so it is never accurate.
The public are always wrong, either right or wrong, it depends on each person's thinking.
when they go against the crowd, they can win boldly, but if they are wrong, they will lose heavily.
This is considered a lucky game. We have no right to decide who is right or wrong.