In investing, fear is used to describe a state in the markets of falling prices. It is also a fundamental human psychology often driving investors to sell their positions.
Fear is often opposed to greed, and included together as the twin forces driving investors. Fear causes them to sell; greed causes them to buy.
It's worth noting that both of these terms have strongly negative connotations, which might strike the common Fool as unfortunate. After all, most Fools believe the stock market and investing are very powerfully good things, and great examples of enduring strength of capitalism and our economy.
Along this line of thinking, one could just as easily substitute "prudence" for fear, and "opportunism" for greed, and come away with the same understanding of how the stock market works, but with a much more wholesome view of it.
Recent Mentions on Fool.com
- Apple, Inc. Really Wants You To Use Beats Music
- Wall Street Still Struggling to Come to Grips with Apple iPhone Demand
- Warren Buffett?s 3 Biggest Mistakes
- Warren Buffett's Investment Secret: Stick to What You Know
- Does CurrentC Threaten American Express and Visa?
- 1 Thing Warren Buffett Desperately Wants You to Know About Berkshire Hathaway