Ryan Duong
Anderson
3/27/14
Economics
In America, there are hundreds and thousands of eager, hungry investors ready to find ways to make easy and quick money, but some don’t understand the philosophy behind investing. A rapid growing economy with everyone buying, investors make the mistake of being persuaded to follow the pack and also buy which causes a high amount of speculation;outweighing opportunity costs. Like a child in a candy shop, investors are anxious to buy overpriced stocks, properties, etc.. Though the main problem is an investment that has already maxed out in future earnings has a considerably low chance of increasing in price and investment benefits compared to an investment that is hit the rock bottom of the economy. A famous quote by Warren Buffett says “buy when people are scared”. Thinking more into depth, I think this quote has a considerable amount of meaning in it. When a market is low and has hit rock bottom what is there to lose? Some people are thinking there is a high amount of risk, it’s actually the opposite because there is nothing to lose. Other than foreclosure or bankruptcy--highly rare for a strong companies like Wells Fargo-- the stock will most likely increase in the future. Another guideline of investment is to diversify investments. Investing in various stocks and other forms of investment will decrease risk. In the future, I plan to follow the instructions of Warren Buffett and incorporate his ideas with my dads venture in investing in residential properties, in order to avoid risky decisions.
Wheelan, C. (2010). Naked economics-undressing the dismal science. W. W. Norton & Company.
