Chapter 3

Recognising What Makes an Investor Tick

In This Chapter

arrow Understanding components of investor psychology

arrow Looking at the standoff between greed and fear

arrow Investing as a casino wheel or sensible strategy

arrow Considering money-making routes for the cautious

Needlework and carpentry are among the skills where you need a firm hand and a good eye as well as technical ability. You need technical ability in investing too. But as well as a firm hand and a good eye, you need an understanding of investor psychology – how you tick and how the other investors who make up the market tick as well. This chapter looks at psychology – but don’t worry, you don’t have to read huge tomes or understand long words.

Good investors know all about the mechanics of buying and selling stocks and shares. They know how to tell a positive company balance sheet from a looming disaster. And they understand that a relationship exists between interest rates, inflation and what they end up earning on their investment cash.

Great investors do all that and something more, something far more vital. It doesn’t involve ...

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