May 11, 2020 in Counseling

Joy-killer

You can’t make a living from floating profits, you can’t plan a pension on unrealized gains. This is second, rare chance.

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On March 3rd, I wrote here:

“My advice is that if you are “a freshcomer”, do not enter the stock market now, even if you may feel that you have missed the opportunity of the lifetime. “

I still insist that in these days, the risk-return duo remains only suitable for short-term traders. Since then, stock markets have risen a lot, some stocks are well above their pre-epidemic historical records, but the indexes have also rebounded quickly, about the reasons for this I wrote in my previous posts.

Just to sum up:

  • unimaginable money printing, persistently zero interest rates, which raise target prices in models ceteris paribus,
  • continuation of TINA (there is no alternative) and FOMO (fear of missing out), but in a multiplied version,
  • we are addicted to the price appreciation as to a drug, that’s what we programmed into HFT (high frequency trading) and AI (artificial intelligence) machines, which is what deep mind technologies have learned as well,
  • we take human losses, we open up and we may be lucky by autumn,
  • we’re going to have terrible macro data down our throats with a few big falls from which we can come back nicely again.

In the coming weeks and months, there may still be time to subtract the consequences of this.

SO

I think those who were mortally terrified in March that a stock market’s wave of sales would ruin their achievements so far, would take their savings or they were about to go bankrupt:

they’ve just been given a second, rare opportunity

I don’t see the future, the epidemic and recovery could take markets in many directions in the coming months. I don’t even offer investment or investment advice, I never did that.

But let’s focus on ourselves, on our own psychological limitations. Do not forget despite the rising prices, if in mid-March it was revealed that your portfolio is not crisis-proof or too risky for your age or wealth situation. Now is the time to rearrange without any major losses.

Instead of self-deceiving, think about where to take it back and how to change your investments. You can’t make a living from floating profits, you can’t plan a pension on unrealized gains.

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