Perry Glasser

TREES DON’T GROW TO THE SKY or WHY RHETORIC WILL LEAVE YOU BANKRUPT

In Business, Economy, Finance, FINANCE FOR THE CLUELESS, Personal Finance, Wall Street on December 17, 2017 at 2:11 pm

Simple Truths

  • The stock market neither advances nor retreats–though prices indeed go up and down.
  • For every buyer, there is a seller.
  • When buyers and sellers agree to prices, they set asset values.
  • Buyers buy with the expectation of future profit; sellers sell when they believe continued ownership of an asset constitutes a risk no longer commensurate with possible reward.
  • No one in a free market is under compulsion.
  • Wall Street is neither a battleground for territory, nor  an adversarial contest.
  • It’s a market.

Wizards require small investors to believe that generals understand the battlefield and so deserve your trust and your fees because they otherwise have nothing to sell.  Internet access to mutual funds, closed-end funds (CEF) and  exchanged traded fund (ETF) has made giving professional advice a media game.

Sell newsletters, attract viewers, collect advertising dollars.  You need not be wise or even right. Scare the piss out of customers, and they come back anyway, thrilled that you were wrong. If God-forbid the doom-saying prognosticators prove to be right, customers will come back chastened and ready to listen.

Market Sentiment

Basically, after getting in the game buy buying 3 to 5 broadly diversified vehicles, you should do nothing. In 2017, if you followed that strategy, so far you are making a mere 20%. Since the vast majority of investing operations on Wall Street are performed by networked machines that monitor every price tick and move great mountains of capital for millions of worldwide financial vehicles, there is no human sentiment involved.

When you as a small investor get the news of sharp price movement, it is too late to act, unless you think and make decisions at light speed and are plugged directly into markets.

  • Machines do not agonize over decisions such as Buy, Sell or Hold.
  • Machines have no hearts. Machines do not succumb to sentiment. Machines do not read the newspapers.
  • Machines do not hold on to send their kids to college.
  • Machines do not save pennies to accrue the down payment on a house.

Nevertheless modern Wizards want us to believe market sentiment exists and that t hey are plugged into that sentiment.

Yeah. Sure. Right. Got it. Roger that.

How do TV Wizards get away with recommending buying or selling new assets every day?

kramer7

Sells perpetual panic and urgency

The fact is that while our money trickles into pension funds, 401ks, college funds, health insurance funds, and all the rest of the vehicles invented by Wizards to lure us with illusions of safety in an uncertain world, machines–owned assets are being sold.  There’s a buyer for every seller, Binky. Remember that.

Machines sell in torrents. We pray for 7 to 10 percent each year, are happy to get 3%, but when the algorithms indicate “Sell,” prices drop 20 to 50 percent in minutes.
Sentiment? Level playing field?

A Warning

Dollar$ is aware that sharp price moves can be precipitated by events and non-events such as national elections. If you think the US is going to hell in a handcart, do you also believe that after crap hits the fan that the money you buried in the backyard will buy a can of tuna?

This is why reasoned investors await blood on the floor before buying, and unless you are within 5 years of a financial goal–retirement, your kid’s first year of college, that down payment on your house–sit tight, never sell.

  • Buy and hold.
  • Ignore alleged “corrections.”
  • Sleep at night.
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