As a financial planner a few years back, I noticed that my clients’ attitudes about stock market investing changed along with the tenor of media reports. That isn’t surprising. Many of our ideas are influenced by various media. But, if you look closer, you can see that it isn’t really the media, it’s the same mindset that occurs in the general population about any phenomenon in live.<\/p>\n
Think about a recent trend. Not some edge trend that never was mainstream, but some big trend that “everyone” got into at one point in time. It doesn’t really matter what the trend was, whether it was a new band, a fashion trend, or something else. How about we use Pokemon Go as an example?<\/p>\n
These trends follow a familiar pattern. First, the initial wave of popularity gets going. These people love whatever it is, and tell everyone they know about it: friends, family, co-workers, you name it. Your friends ask you to download the app. The news is all about how there is this great new thing.<\/p>\n
Their motivation is just that they like something and want to spread the word. The next phase are the people who want to be known as being in on it early. They not only tell people about it, but keep mentioning how long they have already been a part of it. This is where people tell you how they liked Pokemon before there was even a Pokemon Go app. Now it’s not enough to be into Pokemon Go, you have to be one of the early ones to be “special.”<\/p>\n
Next up, it’s everywhere. People all know\u00a0about it. There are McDonald’s tie ins, and new websites, and magazines, and books. There is a very short window at this time, where everything seems ok. But, then, a new group emerges. These are the nay sayers. You see, at this point in time, it is no longer cool, interesting, or noteworthy to be a fan. After all, everyone is a fan. What makes you stand out, or be different, is to be a non-fan. This is the backlash phase.<\/p>\n
Now, what is cool is to be the “only” person who hates Pokemon Go. So, you tell everyone that you\u00a0never liked it in the first place<\/em>, or even better, that you used to like it, but it isn’t cool any more.<\/p>\n Which brings us to the stock market. It follows a similar pattern. After a recession, or other downturn when everyone gets burned, the general mentality is that the stock market is bad. The whole thing is rigged for rich people, and ordinary investors are suckers.<\/p>\n Then, the stock market starts going up. Financial analysts trip over themselves to be the “first” to call a bottom. Articles start talking about the rising markets. People start talking about their 401k plans again, or that they bought Apple stock, or whatever.<\/p>\n For a time, the bull market is a good thing, and everyone is fine, and then…<\/p>\n As an analyst or financial commentator, you can’t get anyone to listen to you, or put you on the front page of finance news websites by saying that the market is good. But, if you talk about how the market is bad, then maybe, you can get some traction.<\/p>\n And, sure enough, the pendulum has swung to people calling a top, or “warning” you about the stock market. This is a sucker’s game in that these people will claim to have called it, no matter how far away they were from the actual top.<\/p>\n Here is how it goes. Analyst Steve writes an article warning about the market. The markets go up 5% after that. Then, as they always do eventually, the market rolls over and goes down 10% from the top. Steve takes credit for saving you the whole 10%, by saying he “Told you this was coming.” The reality is that he actually only saved you 5%. Worse, when the market goes back up, Steve is very likely to be early or late on that change as well. In other words, listening to Steve probably doesn’t help much, and may actually hurt you instead.<\/p>\n Does this mean that there is no top? Does this mean that you should pile into the stock market?<\/span><\/p>\n As always, long-term investors are better off riding out market fluctuations with a well diversified portfolio rather than trying to decide which talking head to listen to.<\/span><\/p>\n This article is for informational purposes only and is not investment advice. This is not a recommendation to buy or sell, or not buy or sell stocks.<\/em><\/p>\n <\/p>\n","protected":false},"excerpt":{"rendered":" As a financial planner a few years back, I noticed that my clients’ attitudes about stock market investing changed along with the tenor of media reports. That isn’t surprising. Many of our ideas are influenced by various media. But, if you look closer, you can see that it isn’t really the media, it’s the same mindset that occurs in the general population about any phenomenon in live. Trendy Stock Market Opinions Think about a recent trend. Not some edge trend that never was mainstream, but some big trend that “everyone” got into at one point in time. It doesn’t really matter what the trend was, whether it was a new band, a fashion trend, or something else. How about we use Pokemon Go as an example? These trends follow a familiar pattern. First, the initial wave of popularity gets going. These people love whatever it is, and tell everyone they know about it: friends, family, co-workers, you name it. Your friends ask you to download the app. The news is all about how there is this great new thing. Their motivation is just that they like something and want to spread the word. The next phase are the people who … <\/p>\nStock Market Trends<\/h3>\n