This quote is a famous investment principle by Warren Buffett. It encapsulates the contrarian investment strategy, suggesting that one should buy stocks when others are selling out of fear (hence, the stocks are undervalued) and sell stocks when others are buying out of greed (hence, the stocks are overvalued). This approach takes advantage of market psychology, aiming to maximize gains by going against the prevailing market sentiment.
In essence, it encourages investors to remain calm and rational, avoiding the herd mentality and making investment decisions based on careful analysis rather than emotions.
