Make America “Greater Fools” Again?
The media has reported new stock market highs with glee. However, it’s unfortunate for most investors because, while the Dow may go to 20,000 and the S&P500 to 2,300 by year end, we should be concerned about what happens next.
Investors have a tendency to do the opposite of what they should do when it comes to investing (buy low, sell high). Greed and fear cause more investors to lose money in the market than being robbed at gunpoint.
Investors should now be selling off investments to those ‘greater fools’ that are willing to overpay for an asset. While the media is putting on party hats and penning articles that the market is back, remember that we have been here before—both on the way up and on the way down.
People spend years in school to become doctors, lawyers and engineers, but spend virtually no time studying the most complicated game in the world—investing. Yet this is what they commit their hard-earned dollars to every day.
To be a successful investor you have to be part historian, statistician, economist, financial analyst, and fortune teller all rolled into one. Even with the requisite skills, education and experience, investing for the long-term successfully is still a challenge in an environment where markets are inefficient and, to many degrees, affected by central bank influences.
With markets trading at extremes, bullish exuberance at peaks and monetary policy tightening, this might be a good time to locate one of those greater fools to sell to. Of course, this is just the opposite of what the media is telling you to do currently.