Boston Globe Online / Business / Conquering the fear -
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Published on: 7/24/2002
Last Visited: 7/24/2002
"People's faith has been shaken," says Jeffrey Heisler, a Boston University professor who studies investor behavior."People had come to believe a narrow set of things about the right way to invest and had forgotten and overlooked a lot of what the experts and academics consider the right way."
Combine market volatility and the fear arising out of multiple corporate scandals with the average investor's short-term expectations for the market, and you've got a recipe for ditching conventional wisdom.
John, a 33-year-old from Charlestown, seemed to speak for many when he wrote into a forum on Boston.com yesterday, saying he was about ready to give up on taking the long-term view of his investments."At this point," he wrote, "I am rapidly losing faith."
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"Buying on the dips works," Heisler says, "as long as you have a solid investment and the dip doesn't get too deep.When the dip gets too large ... people start thinking `This thing could go to zero, and relative to zero now is a great time to get out.' ... It's easy to second-guess yourself out of buying on the dips and into selling near the bottom."
Bailing out to seek a haven.
This is the strategy that gets ripped by most specialists, yet it is also the one that can feel best during turbulent times.