what are hype stocks and why we should approach them cautiously
What are hype stocks?
Hype stocks are stocks that we are recommended to invested in by the news, social media and from our friends.
No matter how many recommendations you see about a stock, you should never buy the stock right away.
Hype stocks usually lack analysis but are fueled by emotions and buzz.
If we follow the belief of Warren Buffet, to be “fearful when others are greedy, and greedy when others are fearful.”
We should stay away from hype stocks but instead invest in stocks of value ie Coca Cola AT&T with strong financial stability.
Mistakes investors tend to make when investing in hype stocks?
Believe that the stock price will remain at a high
Believe that the stock price will keep going up
Believe that they will miss out if not investing
Believe they will get in and out at the right time
Base their investment strategy solely on stock price
Know that buying hype stocks is not investing but rather trading.
Investing is a game for the patient.
You can not hop in and hop regularly nor time the market. If you cannot commit to understand the business and be patient, then do not invest.
Time in the market is the best approach.
Warren Buffett says “If you don't feel comfortable owning a stock for 10 years, you shouldn't own it for 10 minutes."
