Going against the group

Investing is difficult because of our emotional need to "go with the group."  When others are telling us a stock is spectacular we get euphoric and greedy and wish to buy.  If we are told the same stock is a real dog we get pessimistic and fearful and wish to sell.

However, often it is the contrarian investor, the investor who goes against the tide, who succeeds.  This is because he is buying when prices are low (the group is negative on stocks) and selling when prices are high (the group is positive on stocks).

The pioneering global investor, Sir John Templeton, said, "Bull markets are born on pessimism, grow on skepticism, mature on optimism and die on euphoria.  The time of maximum pessimism is the best time to buy, and the time of maximum optimism is the best time to sell."

One of the best investors in the world, Warren Buffet, said, "We simply attempt to be fearful when others are greedy and to be greedy only when others are fearful."

An investor who keeps his emotions in check is more likely to be successful than an investor who does not.  Will you go against the group?