Stockmarket “Monster Spray”?

By Alan Steel

“I can’t understand why people are frightened of new ideas. I’m frightened of the old ones.” – John Cage

_____________________________________________________________________________________

monster spraySometimes the best innovations are the ones that keep the ‘monsters’away; the things we imagine are real, but really aren’t!

It’s these little placebos that allow us a glimpse of the truth even as we’re leaning on them like a crutch. Like the wonderful ‘innovation’ from a pharmacy in the small town of Watford City, North Dakota that made a cure for kids who are afraid of the dark; “Monster Spray”!

Boy could we use some Monster Spray for the markets just now, something that could scare away the negative sentiment, reveal the good opinions from the bad advice, and help see our way clear of the 24/7 filler news and the fears therein.

Hey, remember when the news was on the telly for an hour and then just stopped til the next day? How did we all survive?!

The psychological benefit of a spare can of Market Spray (or two) might have helped a lot of folks participate in, and benefit from, the now five plus year-old bull market instead of hiding in the closet waiting for the media to tell them the good times have finally arrived…because that’s usually when it’s too late.

Tadas Viskanta, in his Avoiding the personal finance monsters, takes this point further on his blog (@abnormalreturns):

“The world is awash in personal finance advice and commentary. There is no shortage of free (and paid) advice out there. While at the same time we are in the midst of what can best be described as a period of gross financial illiteracy. Part of the problem is that consumers have a difficult time distinguishing between good and bad advice.

“The bad advice is often a function of a writer or financial advisor simply talking their book. This is the if you all have is a hammer everything looks like a nail problem. That is why investors need enough education so that in the very least they can tell the difference between self-serving advice and more fair-minded advice. Fortunately this weekend there were a couple of pieces of financial advice that are worthy of your time and attention.

“The first is short, nearly free e-book from author William Bernstein,If You Can: How Millennials Can Get Rich Slowly, that provides younger investors with a primer on how to get started investing. Bernstein notes five things that all investors need to do including focusing on saving and avoiding the “monsters that populate the financial industry.”

Alan here – There are far too few folks out there qualified to give good financial advice; apparently only 1 in every 10,000 has the capability, experience, historical knowledge and mathematical background to do so.

The rest are either making mistakes, making it up or making monsters.

Alan Steel

Must Reads:

@ritholtz 

“Capitulation” is the term used to define a selling climax that often marks the bottom of a bear market. It translates into “surrender” — giving in to the overwhelming need to just make the pain stop. Retail brokers tell tales of individuals bailing out, often saying things like, “Just sell, get me out, please make it go away.”  We also can see capitulation at a market top, where bears throw in the towel, finally flipping bullish after missing out on too many gains - Read more here

@ReformedBroker 

Matthew Boesler always kills it with his chart roundups from Wall Street’s most noteworthy pundits, analysts, money managers and strategists. This quarter’s roundup, out yesterday, is no exception - Read more here

Trackbacks

  1. […] Indicator Still Saying U.S. Stocks Are Cheap (Bloomberg) see also Stockmarket “Monster Spray”? (High Net World) • Five Good Questions with Professor Terry Odean on Behavioral Economics (Above the […]

Speak Your Mind

*