What do comedy and investing have in common? Well, not very much. The gift of any great comedian is timing. Attempting to time the markets as an investor, however, is not funny. In fact it carries serious risks. I’ve lived through some rough markets and I’ve talked to lots of investors. I don’t know anyone who is a good market timer. The reason they write stories about those who saw the big crash coming, is that they are both unusual and lucky. Every day there is clickbait out there that says, “The lady who called the 1987 crash has a warning for investors.” And the article has to remind you who the person is, because she hasn’t been right about anything since. That isn't because she's gotten stupid. It's because she is just like the rest of us--unable to see the future.
At the moment there is 40% more cash on the sidelines than in 2021–typically a sign of pessimism. But cash reserves are also a bullish indicator seen as the latent fuel for the next market surge. Everyone is giddy about 5% money market rates. For your short term money this is objectively exciting. As a long term strategy, however, cash will not get you where you need to go.
What is my point, you ask? In spite of some objectively good news, I sense a lot of pessimism if not outright fear out there these days. I love this quote. I just looked it up to see who said it. I was pretty sure it was Sir John Templeton. The internet backs me up. Of course it also credits Warren Buffett. Whether it was either of those guys, The Dalai Lama, Mark Twain, Oscar Wilde or Rodney Dangerfield the wisdom remains: Be fearful when others are greedy. Be greedy when others are fearful.
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