Ted Allrich is the founder of The Online Investor and author of the book: Comfort Zone Investing: Build Wealth and Sleep Well at Night. In this weekly column, he’ll offer advice to investors who are just getting started.
Two emotions run the stock market: fear and greed. We’ve seen greed hit its apex in the late 90′s when some stocks with profits were selling at more than 100 times their earnings per share. Others had no earnings at all but lots of “eyeballs” (a new metric for dot com stocks). Unfortunately those eyeballs never got monetized, and many of those wonder stocks are names long forgotten. In hindsight, it’s easy to ask: why would anybody buy those stocks?
Yet people did. Lots of people. You couldn’t keep people out of the stock market, and certainly not the Internet stocks, the hottest of all. Greed had taken over the market, with everyone believing they could make a fortune from stocks. The madness of crowds was never more apparent. In hindsight. Of course, we’re all brilliant in hindsight.
