Investments such as property and shares have widely varying prices that can rise and fall. Right now we have a slump in both property and share prices. Many ordinary people lose money because they get caught up with popularly held views at the wrong time. I have been no exception having bought my first property shortly before the crash in London in the late 1980s.
Investment decisions are sometimes influenced by "greed". If you hear that people have invested in a sort of asset before you and see that asset rise in value you may feel you are being left out and try to do the same. If you are say in the early part of an upswing this may be profitable but if it is late in the cycle you may simply pay too much for an asset. (or it it is a property borrow too much too!). When hearing of other people who have massively appreciated investments remember that it is a "paper gain" until the asset is sold when it becomes a "real profit".
Conversely, some people lose money through fear. If you are holding stocks now and the value has plummeted you may fear a further loss. On the other hand selling now may simply mean that you turn your paper loss into a real loss.
Nobody can tell when a market will hit a peak or a trough but Warren Buffet - one of the world's most successful investors - has some prudent advice.
We simply attempt to be fearful when others are greedy and to be greedy only when others are fearful.
He seems to be putting this advice rigorously into practice in today's fearful markets. On 22 September he made a significant investment in Goldman Sachs at a knockdown price. Today he has made a similar investment in General Electric.
