Psychology 01 (Nov 08 - Jan 14)

[Aspellian]

Maybe there is a time limit to it (eg. Professor control the auction time...nobody knows when it ends)

In fact, I have a version of Monopoly that has auction in it as well. And we will bid for a land, driving up the price, and keep pushing it till the auction time is almost up. My kid will end up burning a lot of cash during the auction.

She will ultimately find herself unable to pay me when she steps onto my properties next

Pretty much like the market , isn't it?

wow, you are one smart parent who is grooming the next property tycoon when she grows up!!

[kennynah]

agree..there must be a time limit to this auction, which is not known to the students...like musical chair...knowing it will stop...just dont know when...

still..as aspellian stated, it doesn prevent the split second reaction of $203 bidder to shout out $205 bid at the very instance $204 is bidded....

so..it would have ended up with 2 persons spitting out bids at so fast a rate that when the auction timer is sounded, it would not have been clear as to who won and who came in 2nd...

i don't think the story is credible...based on what has been presented...

[millionairemind]

Perhaps we need to consider the 2nd bidder and how much money he can REALLY afford to lose. That is, the money in his pocket.

This kind of psychology applies to the market as well. I have a friend who had close to one million shares of HO BEE from 2007 to 2009. He said he was a long term investor and kept buying from 1.60 to 1.20 to 0.80 to 0.50.

He finally cut out at 30cts (I think half his holdings) and lost a huge amount of money.

He could not take the loss anymore.

[Musicwhiz]

Perhaps we need to consider the 2nd bidder and how much money he can REALLY afford to lose. That is, the money in his pocket.

This kind of psychology applies to the market as well. I have a friend who had close to one million shares of HO BEE from 2007 to 2009. He said he was a long term investor and kept buying from 1.60 to 1.20 to 0.80 to 0.50.

He finally cut out at 30cts (I think half his holdings) and lost a huge amount of money.

He could not take the loss anymore.

Wow that's a very scary story! This friend of yours must have lost 6-digits!

But why didn't he track the company's earnings/revenue and do thorough research before he averaged down? Doesn't make sense to average down without due diligence.

Just my views.....

[millionairemind]

aiya... every body claims that they are LONG TERM INVESTOR. Only when the tires hit the road that we can see how one performs in the market.

I think he lost close to 300K on that single position alone. But he is a rich man la

[Musicwhiz]

aiya... every body claims that they are LONG TERM INVESTOR. Only when the tires hit the road that we can see how one performs in the market.

I think he lost close to 300K on that single position alone. But he is a rich man la

True, true. My faith was severely tested during Oct 2008 to March 2009 period - it was emotionally and psychologically tough. I will never forget that period - constantly questioning and reading "The Intelligent Investor" to get a hold of the situation. It was a nerve-racking time and getting through it was tough, but somehow I didn't sell at the lows and bought more instead. I think I will be better prepared the next time (I hope).

[millionairemind]

For that, both you and Bordercollie have my utmost respect.

He is also one hell of a good investor.

[Aspellian]

its really not easy (super understatement) to stomach a loss through a crisis. I WAS once too a LONG TERM INVESTOR!!! the rest (of my $) is history...

i have much to learn from all of you guys in this forum. either that, or i just cut loss fast and wait for the wind to blow again.

[Musicwhiz]

its really not easy (super understatement) to stomach a loss through a crisis. I WAS once too a LONG TERM INVESTOR!!! the rest (of my $) is history...

i have much to learn from all of you guys in this forum. either that, or i just cut loss fast and wait for the wind to blow again.

Haha Aspellian, I think this is something all of us need to learn and steel ourselves for. I realize the theory is much easier than the practice! This is because when you read theory, emotions are NOT involved. But when you see your money shrinking by up to 50-60%, that's when your survival instinct kicks in to tell you to "SELL"!

I think for me, if I can manage to survive the next bear market, then I shall be confident enough of myself. Perhaps once was a fluke?

[millionairemind]

I have read this study many years back. When dangers' involved, our heart beats faster, we perspire and have a heightened sense of awareness. This is very similar to our physiological response when we fall in love.

Q: Why are people more likely to fall in love when there's danger involved?

A: There was some great research done on this topic, and it happened in Vancouver.

Researchers set up a woman at the edge of two different bridges: a rope bridge and a wooden bridge. She stopped people as they were coming off the bridges and said she was doing a study about nature and creativity or something, and if you have any questions, give me a call.

What happened was, overwhelmingly, the guys who crossed the rope bridge were much more likely to call her than the guys who crossed the wooden bridge. It's because when you're crossing a rope bridge, you're perspiring, your heart is beating fast, you're nervous – same as falling in love.

So that feeling that the guys were having after the rope bridge, they put it on the research assistant. The guys saw her and were smitten.