Have you ever noticed that when the markets are running up you don’t hear to many complaints? But, if they’re falling out of control, you’ll see panic.
It always starts the same and ends with investors saying “This time it is different.”
Legendary investor Jesse Livermore once stated:
“A lesson I learned early is that there is nothing new on Wall Street. There can’t be because speculation is as old as the hills. Whatever happens in the stock market today has happened before and will happen again.”
Exponential rapidly rising or falling markets usually go further than you think, but they do not correct by going sideways.
The reality is that excesses, such as we are seeing in the market now, can indeed go much further than logic would dictate.
However, these excesses, as stated above, are never worked off simply by trading sideways. Corrections are always just as brutal as the advances were exhilarating.
When the markets brake out of their directional trends (up or down), the corrections come soon thereafter.
As far as we can see the markets HAVE NOT broken their long-term trends.
Regardless of how many times I discuss these issues, quote successful investors, or warn of the dangers – the response from both individuals and investment professionals is always the same.
“I am a long-term, fundamental value, investor. So, these rules don’t really apply to me.”
No, you’re not.
Yes, they do.
Individuals are long term investors only as long as the markets are rising. Despite endless warnings, repeated suggestions and outright recommendations; getting investors to sell, take profits and manage your portfolio risks is nearly a lost cause as long as the markets are rising.
Unfortunately, by the time the fear, desperation, or panic stages are reached, it is far too late to act.
Fear is your worse enemy.
And Wall Street is the master of striking fear in the hearts of investors.
Don’t be their victim!
Read our newsletter and LISTEN TO WHAT THE MARKETS are telling you.
You’ll thank us later.