Simple Economics?

[MatthewHill]

I always hear that when stock prices are crashing, not to panic, but it seems counterntuitive to me. I realized why... its a simple prisoners dilemma. The police arrest two people commiting a crime together. If neither one talks, both will get a better deal, but if one talks, he will get an EVEN better deal while the other is left to rot. Keeping your money in is better for the group unless others choose to capitalize on the slowing declne by getting their money out. The problem of course is that its not just two prisoners, but thousands. Ive withdrawn my money, figuring that i can just put it back in if prices go back up, and id only lose a fraction of a penny on the dollar due to the slow increase in BTC price, where as if the price contnues to sink and i get out quick, i can buy back more BTC than i lost. When the price goes back up... huge profit... thoughts?

[lch]

I think being calm is good advice. Being calm allows you to think, to decide if someone is manipulating the price or not before actually making a decision.

If you can't keep your cool, you will get caught up in someones trap.

[AlphaC]

That's why it's important to think longterm and not focus solely on the short term.

[pickoff]

you should read about game theory if you are interested in actor's decision in a market depending on their size and objectives.

[canuck]

I tend to think of market action as a very emotional sort of game and emotional games are, in my own experience, very unpredictable.  Some people are very good at figuring them out and many of us are not it would seem.

I've focussed my activity in bitcoin on whether or not I think the fundamentals are sound.  Bitcoin has been decreasing in value recently of course and it doesn't even phase me anymore.  I'm more concerned with things like the increasing number of nodes running, how profitable mining is as compared to how much value people are investing it and stuff like that.  To me, the other stuff like trying to find tops and bottoms in a market is too esoteric for me to properly understand.

[bbonbbon]

Only focus on theory dont listen to media

+1

When investing, you have to do a careful analysis of what you buy. If you know you have picked the right assets, you can take advantage of market panic selling. If you don't really know why you picked your assets, you will panic too.