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Why Investors Make The Same Mistakes... Over And Over Again
Everything seems to be moving in the right direction for investors these days. The global economy is doing great, with strong growth in Asia and robust recovery signs from the US economy. Even in Europe we can see the first indications of a revival. As a consequence, investors are buying stocks with renewed confidence and the most important stock markets across the globe are listed at historical record levels.
‘It’s party time on the trading floor’ is a phrase you would hear in professional circles, but all of a sudden the party was abruptly ended by the organization that started it: the Fed. Janet Yellen, chair of the board at the Federal Reserve, openly expressed her dissatisfaction with the party atmosphere on the financial markets. According to Yellen, the valuations on the stock market are ‘very high’ and this could potentially 'lead to trouble'. The statement surprised many investors and Yellen’s words quickly sparked a sell-off.
Investors should not be so shocked, however, since Janet Yellen had already raised this issue of valuations in the past. She specifically referred to excessive valuations in certain segments of the market last summer. At that time, Yellen had her sights set on the biotechnology sector and rightly so. All of this underlines that Yellen is a different type of chair than her predecessor, Ben Bernanke, who never saw danger coming. Not even when the real estate bubble burst in 2006/2007.
What Yellen is doing, in fact, is preparing the markets for the inevitable: a rate hike. The short term rate of the Fed (officially, the Federal Funds Rate) has been listed at 0% since the financial crisis. Never before in history it happened that the Fed lowered its short-term interest rate to zero percent, let alone for more than 6 years. The long-term consequences of this policy are anybody’s guess, which is why Yellen wants to normalize rates as soon as possible.
In short, we are looking at a new rate cycle, which is something we already wrote about last year and something that is of major importance to investors. A new rate cycle often goes hand in hand with higher highs in the market, but at the same time it also the last signals the start of the final stretch of this bullish phase. The first phase of a rate cycle is a great time to safeguard your profits and decrease your exposure to stocks. Selling at a profit is something you do in a market that is (strongly) on the up, not when prices are going down. Nevertheless, we see the opposite happening in the market today.
What we are seeing is that, after years of being on the sidelines, the masses are starting to see the benefits of the stock market. Investing in stocks is mainstream again and, even more, if you are not investing in stocks you are not cool. Frequent updates and commentary regarding the financial markets are back in mainstream media and the underlying message is clear: there is no other choice than investing in stocks. Savings accounts are worthless, bonds are bad, and in the long term you ‘always win’. That is the voice of the media.
Let’s be clear here: as an investor you always have a choice. There is always a segment that no one is looking at or that no one wants anything to do with. Even more, there are often multiple segments that are interesting. Today these ‘secret’ or unwanted segments are gold and silver mining stocks, Chinese stocks, and different commodities… Unfortunately many investors are not interested in these segments at all. The reason, however, is simple: these assets are not going through the roof today while the rest of the market is in ‘great shape’. Let this be a lesson: this is the mistake the masses make time and time again. Buying into hot market segments and following the herd is not the way to financial freedom, to the contrary. This is what causes drama in many families time and time again.
Our analysis indicates that we are slowly – but surely – turning onto the last stretch of this bullish phase, most likely followed by a fierce correction. Of course, the last phase is often the most powerful, but not always the most profitable. Even more, when the correction strikes, those final quick gains will swiftly vanish. At that time many investors will wake up to yet another stock market hangover. Unfortunately, the fault is their own. The right time for going all-out on stocks was 2009 / 2010, when the market just broke out to the upside. Today, with new market highs almost every week and the Fed sounding the alarm, is not a great time. Never forget the most basic rule of investing: buy low, sell high.
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NFLX p/e = 162 ... What a bargin. Is it all a House of Cards?
"Everything seems to be moving in the right direction for investors these days. The global economy is doing great, with strong growth in Asia and robust recovery signs from the US economy. Even in Europe we can see the first indications of a revival."
...............WHAT FUCKING SHIT IS THIS DOPE SMOKING?
Unless his use of sarcasm and irony is extremely well honed.
DavidC
What's more is the author seemed to honestly suggest Chinese stocks are under owned... I wonder if he knows the SSE COMP has doubled in the last twelve months.
VVD-Kamerlid Anoushka Schut-Welkzijn roept minister Asscher van Sociale Zaken (PvdA) op “om met de VVD te blijven nadenken hoe we de lasten voor werkgevers kunnen terugschroeven.”
http://www.nrc.nl/carriere/2015/05/21/ziekteverzuim-is-veel-te-gemakkeli...
Dat kan natuurlijk het snelste met de invoering van het montair gefinancierde @basisinkomen en de implementatie van het GELD=ZUURSTOF-paradigma, maar dat heeft netwerk @MinPres zelfs nog niet met de 'bevriende oppositiepartijen' D66, ChristenUnie en SGP gedeeld.
http://www.trouw.nl/tr/nl/4500/Politiek/article/detail/4036167/2015/05/2...
Het kabinet moet nu nog begrotingen maken in de trant van het SCHULD=H00P-principe en nu die zonder steun vooraf naar de Eerste Kamer wordt gestuurd, kan de Eerste Kamer de ParadigmaCHANGE naar het systeem 'Leven en Laten Leven' inluiden.
http://www.volkskrant.nl/opinie/basisinkomen-maakt-afschaffen-minimumloo...
De planning is dat op de G-7-top in juni de eurolanden met een voorstel zullen komen, om ...
http://www.trouw.nl/tr/nl/4504/Economie/article/detail/4036601/2015/05/2...
... de volgende stap in de 3e SpinozaGolf te zetten.
http://www.volkskrant.nl/opinie/tijd-voor-volgende-stap-in-hervormingen-...
Oud-minister van Financiën Gerrit Zalm mag vandaag voor de parlementaire enquêtecommissie eindelijk eens de waarheid spreken. In zijn hoedanigheid als TopMan van ABN-AMRO is hij immers gebonden aan het zwijgen over (de context van) de wiskundige definitie van de absolute waarheid. Ofwel de impact van de 3e SpinozaGolf op de huidige wereldorde.
http://www.waarheiddelen.nl/index.html
Michael van Praag heeft contact gehad met de Jordaanse prins Ali Bin Al-Hussein en volgens geruchten zijn weer wat aandelen @GuusjA in andere handen gekomen.
http://www.nrc.nl/nieuws/2015/05/21/van-praag-trekt-zich-terug-uit-race-...
Lobbyisten van netwerk @SuperWil zijn al vanaf de dood van Pim Fortuyn bezig om de StatenGeneraal in te lichten over de 3e SpinozaGolf. De drie zogeheten ‘constructieve oppositiepartijen’ willen niet meer in vertrouwen door minister Jeroen Dijsselbloem (Financiën, PvdA) worden ingelicht in de plannen van netwerk Juncker, maar willen dat alles gewoon in het openbaar in de Tweede Kamer wordt gedeeld.
http://www.nrc.nl/nieuws/2015/05/21/c3-stopt-met-begrotingsoverleg/?utm_...
Na jaren van schandalen, miljardenboetes en verscherpte regelgeving om bankiers in toom te houden, zijn er inmiddels politici die Griekenland steunen om het DAB-systeem in de eurozone in te voeren.
http://www.volkskrant.nl/economie/bankiersmores-niet-verbeterd-na-vijf-j...
Veel Amerikaanse en Britse beurshandelaren vinden het heel gek dat de 3e SpinozaGolf nog steeds niet is uitgelekt. Volgens Moody's zijn de vooruitzichten voor het bankensysteem negatief. De acute verslechtering van de financiering en liquiditeit van de Griekse banken moet het domino-steentje worden om alle computers in de verschillende financiële centra te doen crashen. Computers kunnen wel heel snel informatie verzamelen, maar weten niet wanneer de richtlijnen van het GELD=ZUURSTOF-paradigma worden ingevoerd.
http://www.bbncommunity.com/why-are-christians-turning-to-buddhism/#comm...
Oud-minister van Financiën Gerrit Zalm mag vandaag voor de parlementaire enquêtecommissie eindelijk eens de waarheid spreken. In zijn hoedanigheid als TopMan van ABN-AMRO is hij immers gebonden aan het zwijgen over (de context van) de wiskundige definitie van de absolute waarheid. Ofwel de impact van de 3e SpinozaGolf op de huidige wereldorde.
http://www.zerohedge.com/news/2015-05-20/why-investors-make-same-mistake...
De reActie van oud-minister van Financiën Gerrit Zalm op de blauwdruk van het systeem 'Leven en Laten Leven' is nu al bekend.
KlaverenHeer: "Het was alsof je een offerte vroeg voor het schilderen van de buitenkant van je huis, maar dan een offerte krijgt waarbij ook de keuken wordt verbouwd en de binnenkant wordt geschilderd".
Volgens KlaverenHeer regeert netwerk @GuusjA vanuit "een ivoren toren in het @LandvanCuijk" en noemde hen "wereldvreemd, althans de Haagse wereld vreemd".
Dit kan wel eens kloppen, want netwerk @GuusjA wil juist de psychosegelovige structuren in het politieke domein doorbreken.
KlaverenHeer over het gelobby van netwerk @SuperWil: "Ze toonden onervarenheid met hoe dit soort besluitvorming in de Haagse politiek gaat".
Natuurlijk even navraag gedaan bij Stichting Met Elkaar en daar heerst de overtuiging dat noch Michael van Praag, noch de Jordaanse prins Ali Bin Al-Hussein aandelen @GuusjA in hun bezit hebben gekregen. Al is het natuurlijk wel de wens van @SuperWil dat ook 'een Prins' op de aandeelhoudersvergadering zou brainstormen over ...
ywhay ontway ouyay ostpay in lishengay?
Well said...couldn't agree more.
It has not been a mistake to be long for the last 5 years. Let us know the day you are all in short, big guy.
yea, i ve started raising cash after the multi year stock rush.
Hated every second of it. Have been almost all in stocks. Many Zhedgers would shout you down for that proclamation.
Spend a lot of time thinking stocks bonds cash, doesnt matter, gains will be chewed up and spit out at some point from inflation or some other agenda.
We are in uncharted waters and the real captains of the ship are unknown as are their goals and motives.
I think i have a good idea what is up, but their success is only assured if we stay asleep. Not confident at all in an American revival.
Many "investors" are not happy to be forced to participate through 401k's and company stock plans but are forced to ,, NIRP/ZIRP forced many to put money in the markets,, many are illiterate financially and only know "what's working now" (and that includes registered reps) ... They keep making the same mistakes over and over because the industry sells by reinforcing popular themes ,, it's far easier than attempting to educate .. and by the time those themes are easily sold they are old and ready to fail...
"Why Investors Make The Same Mistakes... Over And Over Again" is that they keep trusting the same financial sociopaths, over and over again. Guess some folks just love being lied-to, cheated and stolen-from. Must make them feel important and give reason to their existence. Besides, it must hurt badly for them to think.
"they keep trusting the same financial sociopaths"
ive been reflecting upon this a lot recently. ive had countless discussions about the madness of our financial system with intelligent people who have failed to wake up. i often get them to the point where they will agree with me about everything, but one question almost always comes up: "well then what can i do?". typically they dont like the gold/silver suggestions, TPTB have done an excellent job of that. i think the "why" in the question, namely why people allow themselves to be cheated and lied to, comes down to a few things, depending on the type person.
the first type of person are those who are bright enough to actually comprehend the system and all the relevant implications of that system. i believe that these people really dont want to hear reality. the ramifications of listening to the truth about our financial system and the evil and destruction it engenders would completely break down their world view. it comes down to fear i think, that and an overwhelming sense of helplessness. people want to focus on the good things in life and learning what we know really fucks up the pursuit of happiness. it has changed my approach to my livelihood, life goals, relationships with friends and family, relationships with women, even my ability to enjoy food or watch a football game has been absolutely ruined. how can you enjoy food knowing that youre being poisoned when you eat almost anything except for grass fed meat and organic fruits and vegetables. how can you enjoy a football game when you see the pure propaganda they shove down your throat and the commercials are disgustingly anti-traditional american culture, selling cheap shit that no ones needs and brainwashing you at the same time. how can you have a relationship with a woman who posts her entire life on the internet and talks about the kardashians (if she is stupid) or bullshit false dichotemy politics (if she is smart).
the second type of person is, and sorry im not sorry, a sheep. they are too stupid to realize the truth and even if it were explained to them in a dumbed down easy to understand version, they still wouldnt understand the implications of what is happening.
i also believe that the first type of person is diminishing. i think that a large percentage of the population, when born, actually falls into the former category. this is why TPTB spend so much energy and resources at getting to kids as early as possible. i think they are effectively conditioning everyone as much as possible so that the latter category comes to dominate in terms of size and scope. put simply, i dont think people are inherently sheep. i think most people, if given true freedom and knowledge at a young age, would prosper and flourish intellectually. the existence of so many proles/sheep/fucking retards at the moment can be ascribed to the motherfucking cocksuckers who have deviously taken over and reinforced this system.
one more point i wanted to add about your post. i think very few really understand sociopaths and their prevalence in the US. it is impossible for most to fathom how degenerate and nefarious these people can be. if you dont understand sociopaths you can never understand, for example, 9/11. people just dont realize that sociopaths exist and are capable of doing the thigns that they do, and so trying to explain it useless, because their first reaction will always be: there's no way someone would do that.
It's not bullish; it's Bull Shit.