Put these charts on your wall for reference the next time you think…
- All-time highs are a reason to sell…
- It’s “oversold” or “at support” and has to go back up…
- It’s “overbought” or “at resistance” and can‘t possibly go higher…
- Investors are rational and would never buy stock in the wrong company because of a tweet…
- A meme can’t lead to a mania…
- Mortgage rates can’t go any lower…
- Junk bond yields can’t possibly go down any more…
- Fundamentals are more important in the short run than sentiment and herd behavior…
- You can call a bubble/top without the benefit of hindsight…
- Short selling is easy…
- You know what’s “priced in”…
- The Fed would never dismiss all signs of rising inflation and maintain the easiest monetary policy in history…
- A v-shaped recovery is impossible…
- Rising National Debt is bad for stocks…
They say a picture is worth a thousand words and in markets that is absolutely true. Having a few extreme charts on your wall can be a helpful reminder that there is no such thing as “can’t,” “won’t,” or “has to” in markets.
The market doesn’t have to do anything, least of all what you think it should do. The market does what it wants, when it wants to do it. It is the real-time personification of collective human psychology, with fear and greed on full display.
That’s what makes it so hard and at the same time so interesting. There are times when skepticism is warranted and other times when you need to suspend disbelief, with no manual to help you decipher which situation applies.
Find some charts that speak to you personally, and put them on your wall as a constant reminder that the range of possible outcomes is much wider than any of us think. We’ve already seen a lifetime supply of material in 2021 and we still have a few months to go.
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Related Posts:
20 Rules for Markets and Investing
Put These Charts on Your Wall … 2020 Edition
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