The Gurus All Made Their Fortunes In Market Crises
There's a small secret behind how many of the world's investing gurus made their billions. A lot of their profits came from buying stocks of fundamentally sound companies during past market crashes. A big bargain when prices were artificially driven down by extreme sentiment.
Sir John Templeton (one of the world's greatest stock pickers) made billions of dollars by buying up shares of great companies selling at less than US$1 during the Great Depression (when no one else dared to buy!).
He later saw his wealth multiply a hundredfold in just four years as the market turned around. His famous quote - "invest at the point of maximum pessimism".
Warren Buffet, currently the world's richest man and revered for being the world's greatest investor, made over US$60 billion purely from just investing in the stock market. Buffett made his greatest buys during the oil shock of 1973-1974 and the dot com crash of 2001-2003.
Amid the 1973 crisis, he saw many valuable companies selling at a fraction of their worth and remarked, "I feel like an over-sexed man in a harem".
He happily embarked on a shopping spree and bought millions of dollars worth of undervalued stocks, later turning them into billions of dollars in profits. His famous quote - "be fearful when others are greedy; be greedy when others are fearful".
As you may have realized, all of the most successful (and richest) stock market investors adopt a contrarian approach. Instead of following the crowd, they do the opposite!
They stand by the sidelines watching the rest busy themselves with buying during optimistic times, and step in for the bargains when the market sentiment reverses.
We all agree that the best time to go shopping would be when everything is on sale. But ironically, what we are seeing in the real world is instead quite the opposite. If we likened the stock market to a supermarket, we would be seeing customers rushing out the door when prices drop, and back in again when prices are high!
It is this herd mentality that causes most investors to buy high and sell low, eventually leading them to lose money in the long run.
To be among the minority who make consistent profits from the stock market, it would be logical to go against the herd mentality. It makes sense to start buying when everyone is selling (when prices are low) and vice versa (when prices are high).
Sir John Templeton (one of the world's greatest stock pickers) made billions of dollars by buying up shares of great companies selling at less than US$1 during the Great Depression (when no one else dared to buy!).
He later saw his wealth multiply a hundredfold in just four years as the market turned around. His famous quote - "invest at the point of maximum pessimism".
Warren Buffet, currently the world's richest man and revered for being the world's greatest investor, made over US$60 billion purely from just investing in the stock market. Buffett made his greatest buys during the oil shock of 1973-1974 and the dot com crash of 2001-2003.
Amid the 1973 crisis, he saw many valuable companies selling at a fraction of their worth and remarked, "I feel like an over-sexed man in a harem".
He happily embarked on a shopping spree and bought millions of dollars worth of undervalued stocks, later turning them into billions of dollars in profits. His famous quote - "be fearful when others are greedy; be greedy when others are fearful".
As you may have realized, all of the most successful (and richest) stock market investors adopt a contrarian approach. Instead of following the crowd, they do the opposite!
They stand by the sidelines watching the rest busy themselves with buying during optimistic times, and step in for the bargains when the market sentiment reverses.
We all agree that the best time to go shopping would be when everything is on sale. But ironically, what we are seeing in the real world is instead quite the opposite. If we likened the stock market to a supermarket, we would be seeing customers rushing out the door when prices drop, and back in again when prices are high!
It is this herd mentality that causes most investors to buy high and sell low, eventually leading them to lose money in the long run.
To be among the minority who make consistent profits from the stock market, it would be logical to go against the herd mentality. It makes sense to start buying when everyone is selling (when prices are low) and vice versa (when prices are high).
