In Which Fear And Greed Cycle Are You ?

I have been practicing with the nice Gimp linux software some image manipulation techniques.

The outcome reminds how most market participants feel with regard to their investments. Fortunately the vast majority freaks out and sells during crashes and gets greedy and buys during overvalued periods or market peaks. This can be illustrated in the image below.

The Investor Sentiment Wheel Infographic

If you want to make serious money on the stock market make sure you are not the kind of person who is affected by the herd mentality of the masses shown above. Fear and greed feelings should mostly emerge when the majority feels the opposite. You rather must enjoy times of extreme low valuations, and load as much as you can then, and fear when the market or your stocks are very overvalued and the masses are buying. In conclusion you should genuinely feel almost exactly the opposite of the first image. So rotate it 180 degrees and check out if you feel like the faces here below during those market cycles.

The Investor Sentiment Wheel Infographic

Cheers!
jrv

PD: the original image comes from an e-mail I was sent by www.trustablegold.com, it’s funny that a company specializing in gold “investments” targets value investing blogs but I must admit that the graph is nice. I might edit it a bit more and put real pictures in it :), like that I can have fun and practice a bit more with Gimp on transparent backgrounds.

About jrv

I was born in Spain and lived in Belgium, Chile, France, USA, Argentina among other places. Currently I am trying to settle down in a wild place. I am "retired", even though now I dedicate more hours "working" for my investments than I ever worked in the real labor market where I used to work in IT and Banking. I am a family man, I have a lovely wife, several sons and one step daughter. I have humble tastes, I like to stay home and read about companies and investments. I started investing at 25 before the internet bubble exploded. I did not know much about investing and liked technical analysis so my results were pretty bad. Fortunately I did not have much to lose. Some years later in 2006 bored of doing only real state investments and with quite a lot of money saved I opened an account in a cheap and excellent online broker and started again. This time I did not want to commit the same mistake, so I decided to follow a model. I heard that Warren Buffett was the best at making money via stocks so I started by reading a lot about him, all of his shareholders letters and several of the books that he recommended. I learned a lot, started applying his investing principles and reading a lot of 10K's. Digested news from lots of different sources. Basically I started buying very good and cheap companies and holding them for ever if possible and if nothing changed fundamentally. When the housing crisis started I was more than 75% cash. At that time I identified good companies at incredibly cheap prices so I invested most of my savings in stocks. In less than I year I doubled. By the second semester of 2009 I turned my software company into an investment vehicle and dedicated myself full time to it. My wife and I decided to change our lifestyle and moved from Belgium to the beach in a wild country. The goal was to keep fixed costs low in order to be able to live with a minimum 6-8% yearly return but specially to move away from the inhuman life of civilization and to have finally some peace and sunny weather to concentrate better on investing. Now I can think and study about companies 60 hours a week and I am doing great. I can finally do what I want full time and can proudly say that I have never been so happy, specially also with my just born 4th son, my other great kids and my sweet wife who supports me fully while I study most of the day and patiently wait for the opportunity to make a swing ! You can learn a bit more about my portfolio by viewing it at www.kuchita.com/view/sumo.php or you may learn more about me and my family by following the link "Author's site" from the menu above.
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8 Responses to In Which Fear And Greed Cycle Are You ?

  1. Florian Warninghoff says:

    Haha, good one, jrv – nice to see you goofing around for a change ;-) The fact that the original illustration comes from a gold-speculation company makes this even more amusing!

    If you are interested I could definitively make you a Adobe Photoshop wizard when I am in Brazil!

    Anyway: Beware of using illustrations which are not your IP. I don’t know about copyright law in Brazil but in Germany this got VERY VERY expensive for me (several thousand Euro). Even though the authorities might not care, there is always the possibility of some mad men suing you for basically nothing :-/

    Greetings
    Florian

  2. Florian Warninghoff says:

    They got a nice and quite amusing Buffet infographic on their website too…. http://www.trustablegold.com/infographics/warren-buffett-infographic.jpg

  3. jrv says:

    Yep I got that one a while ago too, quite nice also, you may use them if you refer where they come from. Funny that Buffett is used to market a gold investing site when he thinks it’s one of the worst possible investments.

  4. Milan says:

    This illustration is definitely a keeper for the archives. Especially when my son gets old enough to start investing. Thank you!

  5. jrv says:

    Glad you liked it Milan, I’ll make sure that my oldest son also sees it, specially now that he is 19 and is about to start investing.

    Cheers!
    jrv

  6. Glad to see you guys like this kind of illustration infographics. If you are interested in similar infographics, I could build something similar for your blogs, you just need to e-mail me. I am the one who built these ones (buffett, investor sentiment wheel, gold facts etc).
    Working on these infographics has been fun and has taught me a lot.

  7. jrv says:

    Congrats! I thought they came from a German company specialized in selling gold no?

  8. jrv says:

    The same company that pointed me to the graph above has just released an interesting information graphic about gold facts, I just posted something based on it.

    Cheers!
    jrv

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