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Not at all, Dennis,
A correction is a certainty, a bear is a certainty as are bull markets,
like day and night. But when? I always like to re-read James Flanagan's
"How to Make Money on the Big Moves" reference mass psychology in which
he states:
"The public must have its collective heads turned the wrong way if major
moves are to take place. It is not people being right in the market
that fuels the spectacular runaway moves, it is people being wrong and
having to get out. Big money is made when there are big surprises which
result in the fleecing of the lambs on Wall Street."
Regards, DS
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Dennis Conn wrote: ("P.S. You don't think I'm too bearish, do you?")
> Hello again all,
> I'm not going to include the previous correspondence in this reply - if you've followed this thread, you won't need it; and if you've been making liberal use of the delete button, you won't care to see it anyway.
>
> Have you ever noticed that some currently popular ideas tend to get a slow
> start after they're first introduced? This applies to several different
> things/ideas, from management principles to political ideas, and public
> perception of all manner of things. It especially applies to the way people
> 'feel' about investing in the stock market; for long periods of time, it is
> generally perceived to be 'too risky', 'only for those who have money to
> burn', etc. You may recall the last prolonged bear market which bracketed
> the seventies.
>
> Then, low and behold, a new bull market appears - seemingly (to the general
> public) from thin air! Before much time has passed, people are becoming
> less pessimistic. After a bit more time has passed, and their viewpoint has
> become more positive, the generally accepted belief slowly but surely
> becomes one of "you're foolish not to invest for your future - get into a
> mutual fund!'
>
> Then, somewhere near the end of the bull, anyone who says anything even
> remotely cautionary about the risks involved in speculating near the top is
> held up for public scorn and ridicule. At this point, the cycle is complete;
> and when the crash happens, those who warned of the possibility are actually
> blamed for it!
>
> Now, I'm aware that the ups and downs in a market can all be attributed to
> various underlying 'fundamentals', even though I'm beginning to believe that
> these 'reasons' are nothing more than after-the-fact rationalizations. I
> submit that the only thing driving the current bull market is group
> perception of safe and assured profits, fueled by the bullish concensus of
> those whose living depends on more investment capital.
>
> BUT, has anyone out there noticed the almost imperceptible (at first) sea
> change in opinion occurring? Little by little, bit by bit, justified or
> unjustified by the ridiculous P/E ratios or the earnings or their lack, or
> WHATEVER is pointed out as a warning sign, the mood is gradually swinging
> back towards a more cautious tenor. You see it on CNBC more often these
> days, you overhear the conversations about an imminent crash (or, to be
> politically correct, correction), and you may even find yourself thinking
> about it more often.
>
> The point is that it's nothing but a mood swing on a grand scale, and mood
> swings are not rational; all it takes is a significant, although otherwise
> meaningless simple correction, and the floodgates will open. No matter what
> you may think about buy and hold as a viable strategy, the public lacks the
> discipline to hold when they require it the most - and a good correction
> will demonstrate this to your satisfaction as they step over the grannies to
> rush to pull out before they lose it all; just as they push others out of
> the way now to rush in. No justification is required, no rationalization is
> necessary, and nothing can prevent it - including the unofficial government
> intervention they'll all clamor for.
>
> Then the cycle will begin anew...
>
> Dennis C.
> dconn@xxxxxxxxx
>
> P.S. You don't think I'm too bearish, do you?
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