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I dont know much about economics. But this makes a bit of sense to me.
http://blogmaverick.com/2...-your-money-in-the-bank/
[h2]The Stock Market is still for Suckers and why you should put your money in the bank[/h2]
Aug 20th 2010 11:24PM
I wrote a whole series of articles warning people about the stock market over the years. You can see them here.It’s gotten worse. So I thought i would write some more about why youshould probably avoid putting any new money into the stock market…
If you haven’t noticed, individuals are avoiding the stock market in droves. There has been an enormous exodus from equity based mutual funds.Why ? Because people buy stocks for only one reason, they want them togo up in price. If you don’t believe the market is going to go up. Ifyou don’t believe you can find a greater fool to buy your stock, or thestock your funds own, why would you buy either ? You wouldn’t andpeople aren’t.
The amazing thing is that doing nothing in the market is thesmartest approach to the market. It is pretty much impossible for someman or woman or child who devotes a couple of hours per week to themarket to outperform the professionals who spend 24×7 doing this for aliving and when they are asleep, they have a workforce full of peopledoing more of the same. In this day and age, none of us are smarterthan the market.
I didn’t always think this way. I didn’t ever think there was atruly efficient market until just recently. What changed ? Theavailability of capital changed. While we can argue about whether ornot the market is efficient because everyone has access to the sameinformation, I would always argue that they didn’t efficiently use thatinformation and even if they did, capital was not always allocatedcorrectly to every market segment.
Capital found its way to where people/funds thought they weresmarter than the rest. Some people thought they understood the techmarkets better than others. Some thought they understood retail better,etc. The belief that an individual/fund had an advantage drove wherecapital was allocated. People posted good performance or identifiedmacro opportunities and put their own and others money to work. Otherssaw the success and followed. Like the saying goes “first there werethe innovators, then the imitators, then the idiots
http://blogmaverick.com/2...-your-money-in-the-bank/
[h2]The Stock Market is still for Suckers and why you should put your money in the bank[/h2]
Aug 20th 2010 11:24PM
I wrote a whole series of articles warning people about the stock market over the years. You can see them here.It’s gotten worse. So I thought i would write some more about why youshould probably avoid putting any new money into the stock market…
If you haven’t noticed, individuals are avoiding the stock market in droves. There has been an enormous exodus from equity based mutual funds.Why ? Because people buy stocks for only one reason, they want them togo up in price. If you don’t believe the market is going to go up. Ifyou don’t believe you can find a greater fool to buy your stock, or thestock your funds own, why would you buy either ? You wouldn’t andpeople aren’t.
The amazing thing is that doing nothing in the market is thesmartest approach to the market. It is pretty much impossible for someman or woman or child who devotes a couple of hours per week to themarket to outperform the professionals who spend 24×7 doing this for aliving and when they are asleep, they have a workforce full of peopledoing more of the same. In this day and age, none of us are smarterthan the market.
I didn’t always think this way. I didn’t ever think there was atruly efficient market until just recently. What changed ? Theavailability of capital changed. While we can argue about whether ornot the market is efficient because everyone has access to the sameinformation, I would always argue that they didn’t efficiently use thatinformation and even if they did, capital was not always allocatedcorrectly to every market segment.
Capital found its way to where people/funds thought they weresmarter than the rest. Some people thought they understood the techmarkets better than others. Some thought they understood retail better,etc. The belief that an individual/fund had an advantage drove wherecapital was allocated. People posted good performance or identifiedmacro opportunities and put their own and others money to work. Otherssaw the success and followed. Like the saying goes “first there werethe innovators, then the imitators, then the idiots
