Tuesday, June 16, 2009

Learning from the past ...

Bear - What Bear?
It is amazing how fast the mood of the market can change. The market in my mind is you, me and the pundits on CNBC. Where you want the market to go is almost like a self-fulfilling prophecy. If you repeat it over and over - you will start to believe that it is real.

The recent run-up in equity prices has been just that - a lot of talk, talk of "green shoots", money on the sidelines, bad but not bad-enough ... The arguments are flimsy but the results belie that fact. Even when the will is not there, the market still inches higher. You start to wonder - what gives!

What gives is human tendency to forget and latch on to the latest rhetoric. Not too long ago we were staring at the imminent collapse of the capital markets. Then the market was dropping every day, we were getting scared some more everyday, the end was near and all was lost. From that dismal assessment we have suddenly morphed into ebullient and eager investors willing to bet all our money on the next bull market.

Moral of the story - it is a roller coaster so figure out when to get on and when to get off rather than just jumping off when scared. And don't believe everything you hear and learn from history.

If you enjoyed this post, consider subscribing to a full RSS feed or get regular updates via email.

No comments: