How I’m going to be greedy when others are fearful with the FTSE 100

At The Wolf of Wall Street film, financier Gordon Gecko said that “greed is good”. Now I feel that, in many cases in life, greed is not good. It can cause countless problems if left unchecked.

But at the same time, billionaire investor Warren Buffet told us “Greed when others fear”. Here is what it means and what I agree with people when it comes to investing in it FTSE 100 this year!

Understanding Buffett’s words

Buffett talks about the stock market. People get scared when the market crashes. This may cause some to sell stocks out of fear, rather than having a rational reason to do so. This could push the stock below its long-term fair value. At this point, Buffett mentioned the need to be greedy to buy cheap stocks.

The opposite is also true. For example, I remember in early 2019 when the FTSE 100 seemed to just go up every day. I don’t claim to have predicted the May 2019 high and the subsequent sell-off, but I feel that the rally will not last long. In fact, I fear that others are greedy.

Be early to the party

The FTSE 100 is up 0.66% over the past year. Despite a flat year, some individual stocks have fallen sharply. These include companies from the home, financial services and consumer discretionary sectors.

There is potential for the market to decline in the first few months of the year, due to the gloomy economic outlook. However, I struggle to see a market crash just because we all know how the outlook is. Unless we get more bad news, I think the underperforming stocks in 2022 will struggle to make the move lower.

For those who are afraid of 2023, they will not be happy to buy anytime soon and will sit on their hands and cash. This is one instance where I would be greedy. Buying now allows me to be early to the party. Of course, I probably wouldn’t buy it perfectly at a low point. But when we get the economic recovery and the market rally, I will be able to make the biggest gains.

Buy a beaten-down growth name

Another angle I will apply my strategy to this year is with growth stocks. I won’t claim that I’m too optimistic for the big tech and other sectors of growth stocks. But I feel that compared to long-term fair value, there are some undervalued companies out there.

Since this area is high risk, I have to be careful. So my plan is to pick a group of options that I like best and allocate a small amount of money to each of them. This way, if I make a mistake it won’t break the bank. But even if there is something superior next year, I will make a real profit.

A couple I have an eye on the FTSE 100 is International Consolidated Airlines Group and HAD group.