Four reasons why investors buy when the price is high… and is that wise?
Below we discuss 4 possible explanations as to why investors buy when the price is high:
- Emotional decisions: Many people make emotional decisions about investing, rather than rational decisions. When the market is going up and many newsreports are positive, investors may feel it is time to buy.
- Herding: Some investors tend to invest like other investors, also known as "herding". If many people decide to get in when prices are high, other investors can do the same.
- Fear of missing out (FOMO): Many investors may have a fear of missing out when prices rise and don't want to be left behind when prices rise even further. This can encourage them to buy even when prices are high.
- Insufficient knowledge: Many investors may not have enough knowledge about investing and how to identify valuable buying opportunities. As a result, they may buy when prices are high because they don't know when they are getting a good deal.
It is important to remember that successful investing requires you to be patient and base your decisions on thorough analysis and insight. Buying when prices are high is often a risky strategy and can lead to loss of investment capital.
There is a solution to make sure you don't fall into this trap. Invest a fixed monthly amount of 100 or 200 euros in a diversified portfolio. This is also called Periodic Deposits and more and more bots, such as the BOTS Manager, are specially built for this. It is a proven and successful strategy. This reduces the risk of volatility and research shows that returns are more stable and higher with this strategy. Read more about how the BOTS app works.
This blog is for educational purposes only. The information we offer does not constitute investment advice. Please always do your own research before investing.
Any views expressed in this blog and by BOTS do not constitute a recommendation that any particular cryptocurrency (or cryptocurrency token/asset/index), portfolio of cryptocurrencies, transaction, or investment strategy is suitable for any specific person.