Tue, 23 January 2018
It turns out retail investors are sitting on less cash than they ever. That means the majority of their money is invested and NOT sitting on the sidelines.
And can you blame them?
The market just continues to climb. Everyone is suggesting it's going to go higher. Sure, there are a few voices on the outside suggesting we might be running hot, or even headed for a disaster but in a world where yield is scarce what else you can do?
You stay invested, you invest more. It's the blind leading the blind right now, but I'm reminded of some very sage advice I got when I was learning to trade.
"When the retail money shows up, it's time to get out."
What that means is, when uneducated money is the fuel for a stock, sector or market it's time for you to look for an exit because that's what all the smart money is doing.
How do we know the smart money from the dumb money? That's the catch. You only find out after the market corrects.
I'm not saying get out; I'm not saying stay in. What I'm saying is this market is no longer running on sound fundamentals, and the stupidest investors on earth have the bulk of their wealth invested. If that doesn't give you pause, I don't know what will.
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Answer a simple question for me...
WHEN in history has an increase in technology and production lead to an overall decline in a societies standard of living?
Even if you look at war and the massive increased in the technology used for violence, the overall result has been a decrease in casualties due to the discriminating nature of the tools of war now being utilized.
It's silly to think our lives will be diminished with the advancement of AI. Jobs will be lost, that's a given, but there will always be a place for humanity to provide value and meaning to themselves and others if they only seek to find it.