“Investors wiped another 5 per cent off the Australian share market…”
So was the opening sentence of the front page article of The West Australian newspaper yesterday (9th October 2008).
It should have read:
“Anxious, emotionally fragile, short sighted sellers wiped…”
Movement in the share market index is based on actual trades completed. For every seller there is a buyer.
Buyers are always out for a bargain – it’s human nature. So would-be-buyers submit a bid below what they think the item is worth just hoping for an anxious seller to come along.
The “investors” at the moment are the buyers with long term vision and emotional control. They are not the ones wiping 5 per cent off the share market.
Revered investor, Warren Buffet, is often quoted as saying “the markets are a very efficient mechanism for transferring wealth from the impatient to the patient.”
Wealth creation is a long term game. Whatever you do, do not push the panic button!