How to make money in the market?
The chart covers over 30 years of the market data. Clearly people are holding most of their stocks at the peak of the market with the lowest level of cash holding. Conversely, they dump stocks en mass when the market crashes with the cash holding reaching to the peak at the market bottom. This cycle repeats iteself again and again. Logic means nothing for herd investors. They simply low to chase both ways, FOMO to highs with euphoria😇 and also to the lows with panic😨
Easy, Buy Low and Sell High!
I guess you don't need to be a rocket scientist to understand this. But in reality, history tells us, we are just doing the opposite: For general investors, they tend to buy high and sell low. Don't believe me? See below for yourself.
The chart covers over 30 years of the market data. Clearly people are holding most of their stocks at the peak of the market with the lowest level of cash holding. Conversely, they dump stocks en mass when the market crashes with the cash holding reaching to the peak at the market bottom. This cycle repeats iteself again and again. Logic means nothing for herd investors. They simply low to chase both ways, FOMO to highs with euphoria😇 and also to the lows with panic😨
Right now, we are at the upper end. While a near term severe correction is highly probable, I don't think we have reached the climax yet for the euphoria. After the near term panic is over, we will see another round of chasing highs on a massive scale, which will probably brings us the ultimate top before the next secular bear market attacks.
So enjoy the bubly bull market as much as you can, but also be well prepared for the inevitable prolonged market downturn that may last 5-10 years if history can teach us anything. In the past 100 years, we have only experienced 2 real bear markets each lasting for 15 years or longer. The first one was the most famous Great Depression, which caused the stock market into depression as well for 20 years from 1929 to 1949. Then the next long lasting bear market started in 1966 till 1982 for 16 years.
I bet, the next bear market will last at least 15 years if not longer!😰
PS:
I have registered as 深山老林 at SafeChat (SC) (You need to download the SafeChat app first) and have set up a new SC chat group. I'm gradually shifting our major social media interactions to SC instead of WC. If you'd like to join my group, sign up a free SC account easily and search for me and connect me as friends. For friends sharing similar conservatism views, let's come together to form a better chatting group that won't be constantly disturbed and harassed by the insane radical censorship!
I have registered as 深山老林 at SafeChat (SC) (You need to download the SafeChat app first) and have set up a new SC chat group. I'm gradually shifting our major social media interactions to SC instead of WC. If you'd like to join my group, sign up a free SC account easily and search for me and connect me as friends. For friends sharing similar conservatism views, let's come together to form a better chatting group that won't be constantly disturbed and harassed by the insane radical censorship!
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