Market Is A Pendulum

The stock market is dynamic and prices of shares fluctuate constantly. Thus is normal for any large and open market. It also constantly swings like pendulum between extreme optimism and pessimism.

Stock Market Is A Pendulum

Many lay investors, not groomed in value investing, and driven by uncontrolled emotions of greed and fear; enter the market when it is unjustifiably high. No wonder soon the market crashes. The same investors are now gripped with panic and sell the shares which they had bought at high valuations some time back sell at a steep loss, fearing further fall in prices.

 An intelligent investor on the other hand, knowing the true, intrinsic value of the shares is perfectly at peace during the market turbulences. He capitalizes on the opportunities thrown up by the market.  He purchases when the market is in extreme pessimism and sells when it is in extreme optimism.

The seller from whim the intelligent investor buys and the buyer to whom the wise value investor sells may be the same person, at two different points of time.

What Are the Legal Implications of Standing Guarantee For Others?

Actual Question:

My friend buying a car and telling me to be a guarantor of her finance loan. Does there any problem in future for me? He telling me there will no problem for me in future. I don’t know any thing about finance. He is my good friend.

You could have a problem if she defaults on her loan repayments. Then the lenders will approach you for recovering the dues. Standing as guarantor is accepting responsibility for the loan of others in case they are unable to repay.

Every bank normally insists on guarantees. Usually spouses, parents and natural relatives stand guarantee for loans.

You have to make a judgement whether your friend a reliable person, committed to and having the means to repay the loan even if her job is temporarily lost. Generally prudent persons, leading simple lifestyles and who Control the Urge to Splurge to Become Financially Free will have means to repay even in bad financial times.

You also have to consider that you also may stand in her position in life some times and may need someone to stand as surety for you.

So it is a situation calling for judgement and a balanced approach in life.

Please Note: This is a reproduction of the question I had answered on the website ‘Quora’, which I thought could be useful to the visitors to this blog site also.