..aren't they just creating a self fulfilling prophecy by dumping their shares like panicky idiots? yesterdays 3Q report was favorable and the DOW jumped but it plunged back down again today, totally negating thursdays jump
why the hell do people dump their stocks? could this whole financial mire be caused by people's idiotic and panicking nature? don't they engender that kind of economy by behaving this way? wouldn't everyone be better off if people stopped making these idiotic knee jerk reactions?
You have hit the nail on the head! As individuals, most people are reasonably smart (in the scheme of things!), but as a crowd people are generally stupid; taking this into consideration, contrarian investors do the opposite to "the crowd", buying as the price plummets and selling when it is "racing up" (assuming it's a good quality stock).
Contrarians generally make more money in the long run...
Compare how much better $10,000 invested in Janus' Contrarian Fund has done since 2000 compared with the Dow:
http://finance.yahoo.com/echarts?s=JSVAX…
I agree, but I understand that when people have a lot of money down, say $10,000. To them they are winning if they can save $9,000 of it.