Markets don’t move on logic alone. If they did, bubbles wouldn’t form, crashes wouldn’t overshoot, and everyone would calmly buy low and sell high. Instead, markets are driven by people — and people are driven by greed and fear.
These two emotions are always present. They just take turns being in charge.
Greed shows up when things are going well. Prices rise, stories sound convincing, and risk starts to feel smaller than it really is. People stop asking what could go wrong and start asking how much more they can make.
This is when investors chase performance, increase position sizes, and convince themselves that “this time is different.” Greed doesn’t usually feel reckless in the moment. It feels reasonable. It feels like confidence.
That’s what makes it dangerous.
Fear takes over when prices fall. Losses feel personal. Uncertainty feels unbearable. Suddenly, the same risks that were ignored on the way up feel overwhelming on the way down.
Fear pushes people to sell not because the outlook has changed, but because the pain has. The need to stop feeling bad overrides the need to think clearly. This is why markets often drop faster than they rise.
The hardest part for beginners to accept is that greed and fear don’t cancel each other out. They reinforce each other.
Greed pulls prices above what’s reasonable. Fear pushes them below it. The result is overreaction in both directions — and opportunity for those who can stay grounded while others can’t.
Experienced investors don’t eliminate emotion. They design systems that account for it.
They diversify so no single decision feels catastrophic. They size positions so losses are survivable. They predefine rules so decisions aren’t made in the heat of the moment. They know that if something feels obvious and easy, it’s probably crowded.
This isn’t emotional strength. It’s emotional awareness.
For beginners, the goal isn’t to predict when greed or fear will dominate. It’s to recognize when you are acting under their influence.
If you feel rushed to buy because everyone else is making money, that’s greed.
If you feel an urgent need to sell just to feel relief, that’s fear.
Neither is a signal from the market. Both are signals from you.
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