Do the Opposite

My friend Ben Carlson has a (typically) terrific piece up on how market action and sentiment impact us. It’s hilarious and true, especially on a day like today with oil and stocks desperately seeking a bottom. Here’s a taste.

Bull Markets: Fear of missing out.
Bear Markets: Fear of being in.

Bull Markets: I knew I should have had more of my portfolio in stocks.
Bear Markets: I knew I should have had more of my portfolio in bonds.

Bull Markets: That guy’s been calling for a crash for years — he’s an idiot.
Bear Markets: That guy just called the crash — he’s a genius.

I encourage you to read it in full.

I also encourage you to watch the video version below. Be careful out there.

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Bear Territory

After every football victory, the California Golden Bears declare that the ground on which they stand is Bear Territory. “You know it! What? You tell the story! What? You tell the whole damn world this is Bear Territory!” Watch this particularly lively rendition after a win in The Big Game over Stanford (starting about 1:20 in; my youngest is at the top of the screen and was number 46 for Cal).

Lots of experts and alleged experts in recent days have been declaring that we’re in a different sort of “bear territory” as the market has gotten off to perhaps its worst start to a year ever. Continue reading

Correlation Does Not Equal Causation

Ads for investment products routinely caution consumers that past performance is not indicative of future results.

Notwithstanding that reminder, those same ads frequently tout the product’s past performance. The chart below provides a stark (and funny) reminder of the dangers of relying upon measures of past-performance. Correlation does not equal causation.