Investor friend getting excited again

A friend of mine just rang me up and very excitedly asked me have I bought any shares recently as the KLCI seems to be clawing back again. I said no. He asked why not, he continued to say that Barrack Obama is going to be the next President of America and the American economy is going to recover and thus global equity market will surely going up again.

I caution him not to be over optimistic as many financial experts still see the global economy in very uncertain condition. He said never mind, no pain no gain and asked me to buy some shares as he is going to buy more shares so that when the market actually rebounded, he could recoup some heavy losses he suffered last year till now. I said good luck to him and told him that I would rather stay at the sideline waiting to see either he is going to make money or suffering more losses. My friend was then very angry with me as my pessimism spoilt his mood to increase his portfolio.

Such is the way of investing nowadays, people get over excited upon slight optimism and also become very fearful for minor negativity. Someone say equity market is a zero-sum game, some make money and some lose. But then again, majority of the retail investors are those scape-goats suffering the most as they are easy pray to the abundance financial information available on the media where the genuineness of the information is a question mark. The smart investors who are carefully examining and verifying the available information and then make a long term decision will probably last the distance. The too many small fries who prone to knee-jerk reaction and follow the herd would most likely lost their way in the highly sophisticated and volatile equity market.