patrick.net

Markets can remain irrational longer than you can remain solvent.

If you were watching this show in 1997, would be buying or selling?

Be honest.

Most of us would've sold or waited on the sideline, which meant we'd missed out on one of the greatest market rallies in history.

Why is it that every other investing post in this space is about shorting something? There are very few people who succeed in outsmarting the market.

This is not a good lesson at all.

Plenty can be made betting on market direction. But you have to have the discipline to follow some rules and only work with risk capital. Many people play with their nest egg, get their fingers burned once, and draw the wrong lessons from it.

Pure contrarians are IMO losers because they don't "trade the tape" but rather their preconceptions. Hence Peter Schiff who was married to the idea of decoupling held onto that LONG after everyone else realized it was garbage and that the dollar was not going to be destroyed while other economies flourished.

uomo_senza_nome says

Markets can remain irrational longer than you can remain solvent.

Damn, you beat me to it.

rockyroad says

If you were watching this show in 1997, would be buying or selling?
Be honest.
Most of us would've sold or waited on the sideline, which meant we'd missed out on one of the greatest market rallies in history.

Crap ... I was too busy working! 9am to 9pm...what ever you think 1997 was 4th quarter of 1999 was 3x higher... and that was nose bleed pressure.

thomas.wong1986 says

Crap ... I was too busy working! 9am to 9pm

Back 1998-2000 I was pulling 70-80 hour weeks too, every week. But at least I was getting paid for overtime. Today, your expected to work unpaid overtime.

1998 to 2000 is really "this time is different"
I think it has something to do with "internet boom", "Y2K", "cheap oil", etc

The Internet stock bubble was bad, but the Internet and software development boom was a great thing. Everyone knew that the Internet was going to be extremely important, would make fortunes, and create a lot of wealth by improving efficiency and creating new economic opportunities. And the Internet did all that.

The only problem was that everyone knew the Internet was going to be big and everyone wanted a piece of the pie, so they drove stock prices to ridiculous levels. This just goes to show that something that's good for the economy can still be a bad investment if everyone jumps on the bandwagon.

I still say we're better off with the Internet boom. It has made the world economy better. And today, there are more opportunities on the Internet than there were in the 1990s. This means we should be in an economic boom today. The only reason we're not is because the greedy financial sector screwed things up so bad. If it weren't for those idiots, unemployment would be at an all time low and people would be prosperous and confident.

Vicente says

Pure contrarians are IMO losers because they don't "trade the tape" but rather their preconceptions. Hence Peter Schiff who was married to the idea of decoupling held onto that LONG after everyone else realized it was garbage and that the dollar was not going to be destroyed while other economies flourished

IMO you are contrarian almost per definition when you find a stock that you think is undervalued. You raise a great topic. What do you do if you buy your supposedly undervalued stock and it falls further? It happens all the time (at least for me).

My thinking is this. There are basically two possibilities. Either I was wrong in my original thinking. Or alternatively, the market is even more wrong now than it was before. Both are real possibilities. So I try my very best to re-examine my original assumptions, and also understand what "the market" is thinking. For example, there usually are bloggers and analysts that present arguments why the current stock price is justified. Are those arguments any good? So at the end of that I will either have to concede that I was wrong and sell my stock at a loss, or alternatively, if I still think the market is wrong, I may actually buy more. But I think just holding on no matter what, or for that matter selling off automatically, are both poor strategies.

Dan8267 says

Back 1998-2000 I was pulling 70-80 hour weeks too, every week.

Between comments and threads, you have 3264 posts, and you've been here for less than two years.