The Market Can Remain Irrational…

There are tons of old Wall Street sayings that hold a lot of truth.  And the one that stands out in my mind today is “The Market Can Remain Irrational Longer Than You Can Remain Solvent.”

And if you’ve been sitting on the sidelines for a while you know exactly what I mean.

You should also know that we keep repeating we’re still in the Most Hated Bull Market in History.

The vast majority of investors keep preaching how the markets are gonna crash any day now.  And they’ve been wrong since the 2008 Melt-down.

Of course, listening to Wall Street Gurus does more to confuse you than anything.  Especially when they’re using the bought-and-paid for media Presstitutes as their mouthpiece.

Cue up:  Former FED Chairman Alan Greenspan who, in December of 1996 gave his famous speech titled:

“The Challenge of Central Banking in a Democratic Society”

 

And that’s where he coined the phrase “Irrational Exuberance.”

Any old timers out there remember that?

Greenspan (known for his long winded and hard to understand evaluations of the markets) posed the question:

“How do we know when irrational exuberance has unduly escalated asset values, which then become subject to unexpected and prolonged contractions?”

His remark was interpreted as a warning that the stock market was overvalued, helping to define the era of the dot-com bubble.

And he based his warnings on the fact that from 1993 to 1996 the DOW had risen over 71%.

But instead of crashing, from December 1996 to February 2000, the DOW increased another 57%.

So much for “Irrational Exuberance,” huh, Al?

LOL!

 

 

Let me further make a point by using another old Wall Street Saying:  “The Market Moves in the Direction that Frustrates the Most Investors.” 

A combination of the two sayings would sound something like:  “Fighting the Trend is Frustrating and Causes You to Go Broke.”

Wall Street’s old truisms aren’t rocket science.

The Point?

They’re based on good old-fashioned common sense…and they work like a charm.

So, why do investors make the same mistakes over and over again?

The simple answer is:  Common Sense is Not So Common.

However, emotions like fear and greed tend to override the common-sense factor in even the most rational and logical investor.

They get caught up in “Irrational Exuberance.”

And the best way you can avoid these pitfalls is to remind yourself of the basics.

And, speaking of basics…we have a library of “Wall Street’s Secret Language” and Truisms that we call, Annoying Acronyms that help you see through the fog of investing.

They’re extremely useful and so simple that you’ll have to have someone help you misunderstand them.

Check them out HERE.

And share this with a friend…especially if they remember Alan Greenspan.  They’ll thank YOU later.

And tell them:

We’re Not Just About Finance

But we use finance to give you hope.

“And you shall know the truth, and the truth shall make you free.”

~John 8:32~