3 ms·

Maybe the most common saying that you'll hear WRT to the markets is buy when there's blood in the streets. Then why do so few do it? It's because when there's

by dkrich 5y ago

Maybe the most common saying that you'll hear WRT to the markets is buy when there's blood in the streets. Then why do so few do it? It's because when there's blood in the streets and real fear it's for completely legitimate reasons. What about sell when others are greedy? This too is sage advice, except for one problem- when people are greedy nobody wants to sell, because the market is moving to ever higher prices for completely legitimate reasons. The thing about trying to be contrarian is that true contrarianism isn't just fading what seems like a popular take. Rather, it's fading your own instincts when they reach extremes and telling you to make impulsive decisions, which is one of the most difficult hurdles for humans to overcome. We are incredibly influenced by our environments with major recency bias. The truth about panics is that it isn't a real panic until everyone is panicking, bulls and bears because the reasons for the panic are completely real. Whether they prove to later be buying opportunities is totally irrelevant. The best traders who can actually not get caught up in the hoopla of a boom or bust are one in a million and still get it wrong more than half the time.

JohnJamesRambo 5y ago
I usually can’t buy because it’s my blood already on the streets. Because I’m already invested to the tits because that is what you are supposed to do to maximize gains and I didn’t sell because you aren’t supposed to do that either. I have no dry powder to buy with. But I’m looking to change that this time, I feel a big multi decade level drop coming. I may be wrong but I’ve got Warren Buffet and Michael Burry on my side.
- tartoran 5y ago
  Why are you still staying on the market if you are convinced that a big drop is coming?
  - baq 5y ago
    The music is still playing. Can’t risk the opportunity cost of not being in the game of musical chairs while it does.
    - tartoran 5y ago
      Yeah, thought so. Good luck and hope you time it right when you exit and when get back in at the bottom, if you decide to reenter, of course.
      - Terretta 5y ago
        Those were two different accounts you replied to.
zz865 5y ago
>Rather, it's fading your own instincts when they reach extremes and telling you to make impulsive decisions, Its not just instincts, if you extend the analogy, people dead or injured are not fighting. If a real estate speculator is underwater they aren't buying. Even if they want to buy they can't. Lots of people recognize that Miami/Vegas/Phoenix houses in 2010 were crazy cheap but people who weren't scared were broke.
- dkrich 5y ago
  Right but why don’t they sell before the calamity if everyone knows these cycles repeat? People get caught up in it because they haven’t experienced real pain themselves, think something new exists and because they believe they’ve made money because they’re astute and that they correctly assessed the market it becomes real.
  - baq 5y ago
    If you know there’s a bubble, you want to own it for as long as possible. The problem is, when it pops, it really really pops and you have nobody left to sell to faster than you expect, no matter how fast you expected it to happen. If they were smart, they were selling on the way up.
    - dkrich 5y ago
      Not really true. The COVID crash was the fastest crash in modern history, playing out from peak to trough in about three weeks. But even so, you’d have had multiple sessions to get out before the worst hit but denial was strong. The 1987 crash played out over about six weeks. The dot com bubble burst over the better part of a year. 1929 was about ten weeks from peak to the absolute bottom. But when the selling begins denial takes hold and everyone believes it’s an amazing buying opportunity. Most every crash has begun gradually then accelerated towards the end.
      - zz865 5y ago
        The Nikkei crash was 14 years top to bottom and still hasn't recovered. The UK FTSE100 and French CAC40 are around the same level as dotcom boom 21 years ago https://finance.yahoo.com/quote/%5EN225?p=^N225 https://finance.yahoo.com/quote/%5EN225?p=^N225 https://finance.yahoo.com/quote/%5EFCHI?p=%5EFCHI https://finance.yahoo.com/quote/%5EFCHI?p=%5EFCHI https://finance.yahoo.com/quote/%5EFTSE?p=%5EFTSE https://finance.yahoo.com/quote/%5EFTSE?p=%5EFTSE

by dkrich 5y ago

JohnJamesRambo 5y ago

I usually can’t buy because it’s my blood already on the streets. Because I’m already invested to the tits because that is what you are supposed to do to maximize gains and I didn’t sell because you aren’t supposed to do that either. I have no dry powder to buy with. But I’m looking to change that this time, I feel a big multi decade level drop coming. I may be wrong but I’ve got Warren Buffet and Michael Burry on my side.

tartoran 5y ago
Why are you still staying on the market if you are convinced that a big drop is coming?
- baq 5y ago
  The music is still playing. Can’t risk the opportunity cost of not being in the game of musical chairs while it does.
  - tartoran 5y ago
    Yeah, thought so. Good luck and hope you time it right when you exit and when get back in at the bottom, if you decide to reenter, of course.
    - Terretta 5y ago
      Those were two different accounts you replied to.

zz865 5y ago

>Rather, it's fading your own instincts when they reach extremes and telling you to make impulsive decisions, Its not just instincts, if you extend the analogy, people dead or injured are not fighting. If a real estate speculator is underwater they aren't buying. Even if they want to buy they can't. Lots of people recognize that Miami/Vegas/Phoenix houses in 2010 were crazy cheap but people who weren't scared were broke.

dkrich 5y ago
Right but why don’t they sell before the calamity if everyone knows these cycles repeat? People get caught up in it because they haven’t experienced real pain themselves, think something new exists and because they believe they’ve made money because they’re astute and that they correctly assessed the market it becomes real.
- baq 5y ago
  If you know there’s a bubble, you want to own it for as long as possible. The problem is, when it pops, it really really pops and you have nobody left to sell to faster than you expect, no matter how fast you expected it to happen. If they were smart, they were selling on the way up.
  - dkrich 5y ago
    Not really true. The COVID crash was the fastest crash in modern history, playing out from peak to trough in about three weeks. But even so, you’d have had multiple sessions to get out before the worst hit but denial was strong. The 1987 crash played out over about six weeks. The dot com bubble burst over the better part of a year. 1929 was about ten weeks from peak to the absolute bottom. But when the selling begins denial takes hold and everyone believes it’s an amazing buying opportunity. Most every crash has begun gradually then accelerated towards the end.
    - zz865 5y ago
      The Nikkei crash was 14 years top to bottom and still hasn't recovered. The UK FTSE100 and French CAC40 are around the same level as dotcom boom 21 years ago https://finance.yahoo.com/quote/%5EN225?p=^N225 https://finance.yahoo.com/quote/%5EN225?p=^N225 https://finance.yahoo.com/quote/%5EFCHI?p=%5EFCHI https://finance.yahoo.com/quote/%5EFCHI?p=%5EFCHI https://finance.yahoo.com/quote/%5EFTSE?p=%5EFTSE https://finance.yahoo.com/quote/%5EFTSE?p=%5EFTSE