CHAPTER 9Behavioral Selling
Everyone has the brainpower to make money in stocks.Not everyone has the stomach. If you are susceptible toselling everything in a panic, you ought to avoid stocksand mutual funds altogether.
—PETER LYNCH
WHAT MOVES A STOCK?
Before you can use the tendencies and reactions of the market to your benefit, you must understand the basics of behavioral finance. My primary rule for success in the market is to keep things as simple as possible. When a stock is volatile and moves either up or down, it’s because there are more traders playing one way.
Over the years, I have been very surprised to learn just how many people don’t understand what drives a stock higher or lower. This is probably the most basic of information. A ...
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