1932 – A Swell Year for the Markets

Sharpest bull rallies happen during bear markets – there, I had to spell it out for you leeches. Seriously, do they actually read their own headlines or has the U.S. educational system been eroded down to the point when even people in the industry have lost all sense of history?

If I was long right now, or would have somehow clung to my stocks during the October crash, this headline would be the straw that broke my camel’s back. Seriously, whoever sees this and does not take advantage of this lovely Christmas present they’ve just been handed needs to check themselves in for a frontal lobotomy (which incidentally instantly qualifies you for a gig as an MSNBC anchor person – bring your own suit).

I spoke with someone at the gym today, who’s pretty loaded and has a few hundred grant running in the market. Three months ago I told that guy to get out of the market as it was about to get pretty ugly. Of course he didn’t. A month ago I told him that the market would drop to about 7200 and then rally like crazy. Guess what he did – he waited all the way to the bottom and then sold his equities last week. Lost over 50% of what he had just a few months ago. Was this guy listening to anything I was saying?

Now, I asked him today, how something like this can actually happen. How do you see your portfolio go down by 5%, 10%, 15%, and even 20% and still hang on to what you are holding? What is the underlying thought process? I can tell you what it is – it’s one of those cognitive biases – in particular the notorious disposition effect. Traders and investors alike have a tendency to ride out their losses and to cut their winners short – pretty much the opposite of what you should be doing. Well, this reconfirms my general outlook that the majority of investors out there are sheep waiting for a shearing.

When it really comes down to it – it’s a reptilian brain ego thing. Hey, I just lost 30% in GOOG, I can’t cut it now. It’ll come back – I know it – after all, how low can this thing go? This is exactly the kind of shit that those fucking brokers tell their clients when panic sets in and they call in to close out. Well, pal – guess what – it can go all the way baby – all the way!!

This is something people just don’t seem to get into their greedy hapless little pea brains. Something moves against you 5% – 10% – you dump the damn thing. Spit on it while you do. Why not take your perfectly good leftover money and put it into something that actually is going up? It’s not like winning and losing is some kind of ‘taking turns’ game. Your lovely FNM shares you’ve held for a decade just dropped 10%? Kick them to the curb without any further thought or compunction.

But nooooo, those wankers don’t just want to make their money back with some other high flying stock. It’s got to be this one – now it’s personal after all. How dare this damn thing dare to go against my superior stock market analysis? Impossible – well, I’ll show this fucking stock who’s boss!

Unbelievable… some people really need a trip to the cleaners and back before they learn. Some never do – those are the ones who wind up losing it all. And then go on blaming the market for it. Guess what – the market does what it does – it goes up and down. Just because it’s been going up for a few years doesn’t mean it’ll continue to do so. Life’s short – grow a brain.

Cheers!