In my post of 9/13/13, “The Trouble with Bull Markets,” I talked about some of the behavioral problems investors encounter as they navigate Bull Markets. That post got a lot of comment, but there is another issue I failed to mention, so I’m inserting this blog here.
Ok, so you messed up your knee and got surgery. The doc hands you a crutch and tells you to use it for six or eight months and your knee’ll be as good as new.
Investors love Bull Markets and hate Bear Markets. Big surprise. But in my view it’s a badly misguided sentiment, for two reasons. First, the seeds of most serious, permanent losses of capital are planted not during Bear Markets, but during Bull Markets. Second, the only time you can reliably buy an investment asset with a strong likelihood of a sound return is during Bear Markets, when prices are cheap, not during Bull Markets, when prices are expensive.
I love saying, “I told you so,” maybe because I so rarely get to say it.
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