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152 Don’t Make Me Say I Told You So
Stock price
IPO (November 1998): $9
All-time high stock price: $97
February 2001: $0.09
Note: Although shares were priced at $9 for the IPO, the first
trade was at $87, and reached a peak of $97 per share before
closing at $63.50 on the first day of trading. The gain of 606% was
a record for any stock on the first day of trading. The company
was valued at $840 million at this time.
As investors in these companies learned, though greed is
a much less powerful motivator than fear, it can also cause
investors to make poor decisions that lead to losses.
Summary
► Failure to control emotions is a primary reason investors
have trouble making sound investment decisions.
► Recency bias, the feeling that whatever is going on now
in the financial markets will continue indefinitely into the
future, can be a prime cause of making decisions based
on fear and greed.
Chapter 4: The Most Common Investor Mistakes
