…for “adaptive” investing.
Bottom line? The market does not always seem ‘logical’.
From Barry at The Big Picture:
• Whether a premise is fundamentally true or false is irrelevant as to whether it is actionable. If enough fools believe something is so, it will impact the markets.
• Always be conscious of the cognizant biases and selective perceptions you bring to investing. Recognize the same bias in the crowd, the media, and Wall Street. Avoid the herding effect.
• After a a 55% market sell off, most of the terrible structural news that existed before the collapse is reflected in prices. (Let it go).
• You must acknowledge when the data gets stronger or weaker, regardless of your current market posture. Be skeptical, but not rigid.
• Variant perception is a rarity; Identifying the moment when the crowd figures out they are wrong is rarer still.
• Market Pros simply cannot afford to sit out a 75% rally; Individuals that miss that sort of move should reconsider their investment strategies immediately.
• Cheap markets can get cheaper; Expensive markets can get dearer.
• Every thing cycles: Recessions turn into recoveries; bull markets give rise to bear markets. Every rally that there ever was or there ever will be eventually ends. Adapt to this truism or lose all of your money.
• One of the hardest things to do in investing is to reverse your thinking. It is even more difficult to do after a certain approach has been successful for long time. The longer the period of successful thinking, the more important the reversal will be.
• The markets frequently diverge from the macro economic environment. This can be both long lasting and maddening; Your job is to be aware of how wide the gap between the two is.
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