A big part of investing is understanding that every strategy moves in and out of favor. As the saying goes, the best strategies perform well over time, not all the time.
The second part to that is understanding that stock prices are in constant flux. The second you believe prices move in one direction is the moment you set yourself up for trouble later on.
History shows that for some reason – complacency, ignorance, panic, FOMO, greed, envy, whatever – many investors change strategies during a market cycle. Whatever strategy they were using, if they had one, is no longer good enough for the recent price action.
It’s that chasing of returns versus anticipating a change in those returns that lead to higher risk taking and uncomfortable endings. Continue Reading…