naved-abdali Quotes About trading-psychology

“The government wants to keep the capital markets healthy and thriving. They will do whatever in their power to avoid or reverse a recession.”

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Author:Naved Abdali

“Broad-market indexes like S&P 500 must rise over the long term. The upward path is the only logical direction. Prices can be suppressed for a short period, but eventually, the index will continue its course.”

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Author:Naved Abdali

“Always remember that the minority dictates the prices, and the majority governs the value.”

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Author:Naved Abdali

“Always remember, the minority dictates the price. A company may have billions of shareholders, but it only takes one shareholder to change the price.”

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Author:Naved Abdali

“If your bull case to buy a stock is “a sharp price drop” or "price is going to the moon”, you don’t have a bull case.”

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Author:Naved Abdali

“Watching every tick up and every tick down is just wasting your valuable time. Do yourself a favor, and pick up a book or two about investing each month.”

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Author:Naved Abdali

“It is challenging for a human brain to distinguish between noises and threats if a considerable value is at stake.”

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Author:Naved Abdali

“If you have some working knowledge of business and accounting and have a lot of patience to ride out market ups and downs, you can be a stock picker. You just need to understand that stocks are proportionate ownership of earning businesses.”

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Author:Naved Abdali

“Investors need to keep their emotions in check for a successful investment career. It is the most important requirement. It’s even more critical than having access to capital and markets.”

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Author:Naved Abdali

“Greed and fear are both good and healthy for an investor and capital markets as a whole. Emotions are like fire, beneficial if controlled, destructive if wild.”

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Author:Naved Abdali

“Greed and fear are in our DNA. We can’t get rid of them, but we can learn how to keep them in check.”

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Author:Naved Abdali

“Traders and investors are humans, full of emotions, behavior biases, and good and bad past experiences. We don’t have much control over psychological shortcomings, and we routinely make decisions contaminated with our emotions and biases.”

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Author:Naved Abdali

“This tendency of overconfidence and poor outcomes is not confined to only retail investors. Institutional investors suffer from overconfidence equally if not more, and their investment results are not superior either.”

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Author:Naved Abdali

“Generally, a cheap stock is cheap for a reason. If you don’t know the reason, you will be better off investing your capital elsewhere.”

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Author:Naved Abdali

“The actual risk is the permanent loss of capital or, to a lesser extent, a sub-par return. Temporary volatility in market price is not a real risk.”

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Author:Naved Abdali

“All capital investments inherently suffer the risk of permanent capital loss. As an investor, it is your job to differentiate between market volatility and a permanent capital loss. You can only achieve this when you fundamentally understand why you bought the asset in the first place.”

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Author:Naved Abdali

“When you invest in stocks or any other asset, your primary risk is the permanent loss of capital. Your secondary risk is a sub-par return, and that’s it. You don’t have any other risk.”

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Author:Naved Abdali

“Humans’ reactions are contaminated with their cognitive biases, greed, fear, and survival instinct. However, capital market success requires precisely the opposite behavior of what your intuition is suggesting.”

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Author:Naved Abdali

“Individual investors have significant advantages over professional money managers. Retail investors, like you and I, have nobody to report. We have no benchmark to beat and have no fear of capital flight. There are no quarter and year ends, and performance is not linked to calendars.”

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Author:Naved Abdali

“Gold, paintings, or bitcoin are all examples of buying a bigger-idiot type of asset. You can be lucky and find a bigger idiot most of the time, but if you consistently play the same game, once in a while you will be the biggest idiot. You will find yourself holding the bag all the way down to market bottoms.”

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Author:Naved Abdali

“Fear-of-missing-out is more powerful than fear of losing.”

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Author:Naved Abdali

“In a bubble, people demonstrate some sort of cult-like behavior. They defend their positions, not by economic logic, but by force. They do this by calling those who disagree with them dirty, and mocking people who give them prudent advice.”

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Author:Naved Abdali

“When enough people believe that prices will keep rising forever, a bubble starts.”

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Author:Naved Abdali

“In a bubble, people are ready to pay any price without any regard to intrinsic value or any value whatsoever because they believe they can always sell it for a profit.”

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Author:Naved Abdali

“The combination of our natural desire to be better than our peers, our faulty assumption of dodging risk, and our flawed belief of having better chances than others, pushes us into excessive greed territory. We take more significant and sometimes fatal risks.”

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Author:Naved Abdali

“It is always better to avoid hyped stocks and desire to double your money in no time.”

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Author:Naved Abdali

“If the buyers believe that they can sell assets to other buyers at a higher price, then the purchase price becomes irrelevant.”

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Author:Naved Abdali

“in a rising price environment, party culture and a gambling mindset take over. People think it is easy to make money, and it is fun. The stock market is a big giant casino where the odds are in favor of gamblers. The more you play, the more you win. However, the facts are precisely the opposite.”

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Author:Naved Abdali

“Analyzing prices is not wrong. However, picking inflated prices as your only source of information is terrible.”

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Author:Naved Abdali

“Trading is buying and selling to exploit a change in the price. Investing is acquiring assets for economic reasons.”

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Author:Naved Abdali

“Be realistic about potential market returns, and be aware of possible risks.”

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Author:Naved Abdali

“The more investors do active trading, the more it makes sense to do passive investing.”

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Author:Naved Abdali

“If the prices were the motivation for buying, all future behavior and decisions would be based on price action.”

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Author:Naved Abdali

“Greed pulls people in, and fear pushes them out.”

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Author:Naved Abdali

“You must not be a seller if not a buyer in a massive down-turn.”

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Author:Naved Abdali

“Whatever anybody does or does not do is based on either greed or fear.”

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Author:Naved Abdali

“One emotionally-driven investment that causes massive losses is enough to keep you away from all investments for life.”

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Author:Naved Abdali

“Investments are not a lottery; if it feels like the lottery, stay away from it.”

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Author:Naved Abdali

“Somehow, we believe that we have a better chance of winning a game of probabilities, totally disregarding that everybody who is playing the game has the same possibility of winning.”

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Author:Naved Abdali

“The outcome of an investment does not make it right or wrong.”

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Author:Naved Abdali

“Once you have a plan, always invest within the boundaries and parameters of your plan. Never bend your rules to accommodate your guts.”

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Author:Naved Abdali

“Never bend your rules to accommodate your guts.”

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Author:Naved Abdali

“Trading is not only a zero-sum game but an aggregate negative after deducting the trading cost and research expenses. Somebody’s gain is somebody’s loss, so the professional traders win the game because they have significant advantages over retail traders.”

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Author:Naved Abdali

“Short-term price fluctuation is not the real risk. It is an opportunity.”

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Author:Naved Abdali

“People like to risk pennies to win dollars.”

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Author:Naved Abdali

“People tend to weigh their most recent experiences more than the affairs of the past.”

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Author:Naved Abdali

“Identical information can lead to opposite conclusions based on relative perceptions of its receivers.”

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Author:Naved Abdali

“Humans are not machines. They analyze information through the lenses of their experience, knowledge, and cognitive biases. All of it makes their perception, their unique viewpoint.”

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Author:Naved Abdali

“The success of an investment is all about its execution and is not about its outcome.”

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Author:Naved Abdali

“Have a plan. In writing.”

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Author:Naved Abdali

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