Clever and Na?ve Groups

There are two groups in the game of the stock exchange market; these are made up of the clever and the na?ve people. The clever ones have money as their own capital; they are patient and are level headed enough to not react with too much excitement in face of any happening that does not have a great amount of importance. These people also have their own ideas, in other words, they know how to act in an intelligent way by using their minds in reflexive and conceptual way. The na?ve group, on the other hand, is those that only have a little bit of money as their own capital and that are usually overcome with debts, do not have a lot of patience, they are usually weak and have not completely understood that the stock market does not react automatically with each one of the happenings that occur like one could think should be done according to logic. The na?ve investor lacks the ability of conceptual analysis and acts in a purely emotional and imprudent way. If the others buy it, he also follows and buys; if others are selling he will also go out and sell. This is more like one more molecule of the mass and it acts along with it. In the stock exchange market, consequently, everything will depend in the hands the stock can be found in. if it is the clever ones that have most of them, the stock exchange will be well prepared for an interesting movement of increase, even when the news is not necessary that favorable. If on the other hand, most of the stocks are in the hands of the na?ve group, any pessimistic news, even if it is not very important, can cause a disaster to occur. It is very easy to buy a stock inside the cycle, given that there will already be a lot of people that want to get rid of them to save themselves but it is very difficult to do so, because psychologically, the fear that they will continue going down will be the opposing force. In the same way, it is very easy to sell a stock in the maximum level of its cycle since there are many people that want to get in on the party, but it is very difficult to do so, because ambition will be the driving force that will go against them, making them believe that it will keep on increasing even though the technical indications show that the cycle is about to expire. In this way as we can appreciate, which group we decide to belong to, whether this is the clever or na?ve, will depend entirely on us. It is also very common that after a fundamental or technical analysis people take a position that is wrong in the market. We have been acting like “clever” guys, but we involuntarily pass on to forming part of the “na?ve” group.

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