Idiots Guide to Psychological Investing

Discussion in 'Psychology' started by Allen3, Mar 12, 2009.

  1. Allen3



    I'm having problems understanding this market environment. Maybe you are a little confused as well? If not you can school me and others, Please do. Here's what I'm seeing.

    Market tanking straight down. Some news stories are end of the world, some are just depressed, some are hopeful for the long term, and some are calling a bottom every time we have 3 days of the market not going straight down and Dow is 10,000 by end of the year.

    At what point is the contrarian in me supposed to come out? I mean holy crap we've just had a 60% drop in a little more than a year and last week my father-in-law stared up at the TV and the the Dow stopped at negative 40 points for a bit and he said "Ooo somebody must really like the market right here". He has held through a year of this crap and still has a buy and hold, maybe even double down mentality, and from what I can tell, although I try to avoid it for my sanity, half of the pundits are calling bottoms and looking for rallies after each short squeeze.

    At what point is it enough to go contrarian?

    I don't doubt there will and probably should be some healthy rallies in the midst of a bear, but when you get a one day up and everybody's a buyer, how can I justify buy too?
  2. 1) Develop a method that you can execute independent of "news" announcements.
    2) Don't be obsessed with buying the market at its absolute bottom. :)
  3. The only time to listen to pundits is when somebody posts a video showing how incredibly bad their calls were. At least you can get a laugh out of them.
  4. Allen3


    Very good point. Market hasn't come close to reversing any trend following signals. I am too focused in on the exact inflection points. Not really a trader anyway. Now just focused on long term retirement investment decisions.

    I think I have to unlearn looking for a day trading method and relearn going with the long term flow in the market. these spastic swings in crowd psychology are makin my head spin. Thanks for you r response.
  5. Allen3


    Yeah. Never much discussion of all the bad bottoms broken in the last year. The spur that started this thread was flipping through the channels in the morning trying to wake up and seeing the (older bloated guy?) on CNBC calling 6500 a solid bottom the day after it happened. Everybody acts as though 7000 isn't 7000 points down from 14000.

    I would like the stock market to stop going down, but from a contrarian perspective, the irrational exuberance is still alive and kicking. How far is it going to have to go before we get some real down in the dumps pessimism.


    From the look of my family and friends nobody has sold stock yet out of their accounts. From the standard advice I catch from investment advisors everybody is staying put and/or going in for a second helping with there cash reserves and new retirement money, they keep it safe of course by dollar cost averaging.

    Anyway. Back to work.
  6. The #1 problem with all aspiring day traders is that they never learn how to judge the bigger picture. All of them instantly on the first day of study look at the intraday movements. If someone was to hand them a daily 9 month chart they would gain nothing from it.

    Learn the long term flow and you can't help but learn successful methods to "day trading."
  7. Bootsie


    We're in a bear market... punctuated by a painful, slow and apethetic move down (Feb.) with a violent (last 3 days - 13%) move up... then into another slow and painful move down... rinse repeat until you get to 500 or 450 in the ES... then slow painful move up with violent moves down => bull market... blah blah.

  8. Warning . . .

    Anyone that takes the above advice from a clown that doesn't even trade and spends his ENTIRE DAY in the "Politics & Religion" forum is destined to crash and burn.

    If you don't believe me, see for yourself:
  9. Vis a vis the above post, I don't give advice. But I can tell you what I am doing.

    Based on my tax bracket I am buying Ginnie Maes. Bringing in about 4.5% now with a average duration less than 2 years. I am putting in a percentage of my disposable income each month.

    Also buying carefully selected corporates as well. Again this is because I am in higher tax bracket.

    I own a little bit of gold (physical bullion) that I am just holding because it has moved up significantly since I bought it some years back. I consider this a windfall, and I am leaning toward liquidating when/if it moves to the $1200/oz area.

    I own some stock that I consider "a bargain" including Citi at $2.90. Basically I am just buying distressed shares where I think I have a chance to hold and make long term profits.

    I have been buying real estate at very good prices (cash offers).

    Finally I am trading the ES contract intraday.

    So far so good.
  10. T2GR8T


    Nice to see steve46 back after blowing out his account using Hershey's SCT

    Now lets not have any tall stories like the last one where your non existent sister died in 911 Steve

    Then you wont have to slink off the site with your tail between your legs
    #10     May 4, 2009