Rising prices suck attention: Why we buy high and sell low

Higher prices attract attention and create FOMO

Here’s the flywheel driving “buy high & sell low” behavior:

  • A stock’s price starts going up

Rising prices — especially if they’re quick — suck attention.

No one gave a shit about toilet paper until people started hoarding them during Covid and prices shot up 15.6%.

This happens in all kinds of markets, across all types of media. One week it might be Dogecoin, the next week it might be some forgotten tech stock.

3 observations why we react to price this way:

  1. We value what society tells us is valuable. This is most easily communicated via price. We naturally don’t pay as much attention to things of low value.

All reactions based on price could be balanced by taking a long term view.

Instead of buying or selling out of reaction (to price or otherwise), build conviction over time.

When there’s an asset that’s not getting much attention amidst price fluctuations, remember: Silence is golden.

When no one else is paying attention or feeling the hype, that’s the opportunity to “get in early” on an investment.

When it’s quiet or prices aren’t exciting, that’s when long term investors get to work.

Bonus: Long term investors have the luxury of not dealing with short term fluctuations.

Writing about personal finance OzChen.com and UX Design on UXBeginner.com