March.26.16Budget‬
easter-egg-math
Money Matters with Nimi
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fngDo you remember the tale of “The goose that laid the golden egg.” It goes like this; Once upon a time there was a farmer who owned a goose. One morning he found that the goose had laid a golden egg. Thereafter, each day the goose would lay a golden egg. The farmer soon made a fortune by selling the golden eggs. Soon, he was no longer satisfied as he felt he could get even richer, faster; he wanted all the golden eggs all at the same time. He became very impatient and one day he slashed open the gooses belly to try to retrieve all the golden eggs at once. He was left with a dead goose and no eggs.

Moral

“Don’t count your chickens before they are hatched.” Because he was greedy and impatient and wanted all the eggs at once, the farmer ended up with nothing. Many investors are like this farmer. They become greedy and lose the balance of discipline. “Killing the golden goose” has become a metaphor for any short-sighted action that may bring an immediate reward, but could ultimately prove disastrous.

Many amateur investors don’t understand market and economic cycles, nor do they keep abreast of stock market ratios and data. Generally when the stock market is having a good run, they become greedy and are lured by great expectations; they are guided by greed, rumour, and what their friends are doing, and jump on the bandwagon with all they have, and all too often, when it is too late.

Naturally when everyone is diving in at a high point in the market, the seasoned investors generally retreat. When the stock price starts to decline, and the amateur investors begin to visualise huge losses, they panic and start selling their investments at very low prices, below market value, which gives the seasoned investors a chance to go back into the market to pick bargains. The cycle starts again. As the stock market values continue to appreciate, don’t wait until the all time high before you plan to get back in.

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