Response to Emotional Capital

from Martin Naarendorp

Nice one Monica…
The market say’s…
The market is free
Who is ‘the Market’?

A bear market is one that cannot rise even on good news.
A bull market climbs a wall of worry.
A bull market is one that can shake off bad news.
A rising tide lifts all boats. [or yachts]

As goes January, so goes the year.
As goes the first week of January, so goes the month, and so goes the year.

Baked in the cake or Baked into the cake. [speculators have already bought or sold a stock or other asset so that a hypothesized future outcome is already fully reflected in the asset price.]

Bear market bottoms usually see P/E ratios below 10 for the S&P 500. – Notice that it says usually!

Best house in a bad neighborhood. [Implies that an entire sector is in the dumps, but one company stands out as being at least relatively best compared to the other companies in the sector.]

Buy any dip.

Buy into weakness.

Buy the dip.

Buy to the sleeping point. [If you are troubled about making an investment but still feel the need to make it, make the smallest possible investment that leaves you feeling like you’ve ‘dealt’ with the need and can calmly sleep at night.  To feel obligated to make an “all or nothing” investment.]

Buy high and sell low. [What investors should not do, but it happens far to often.]

Buy low and sell high. [The best way to make money.]

Buy on the rumor and sell on the news.

Buy the rumor and sell the news.

Buy the rumor, sell the fact.

Buy the rumor, sell the news.

Cash is king. – implies that the downside risk with bonds or stocks or commodities is excessive.

Caveat emptor – Let the buyer beware

Chasing yield. [Searching for riskier assets that have a higher yield or return.  It’s not a good thing to do.]

Don’t fight the Fed.

Don’t fight the tape.

Don’t marry your stocks. – accept the fact that changing conditions may dictate that you sell a stock, regardless of any emotional attachment.

Don’t try to catch a falling knife. – something you don’t want to do.  The idea is that if something is falling you could get hurt trying to catch it in mid-flight.  Better to let it stop falling and pick it up safely.

Economists are good at predicting recessions.  They’ve predicted eight of the last three. – there is no shortage of “professional” cynics all too trigger-happy to forecast doom and gloom.

Economists have correctly predicted nine of the last five recessions. – Paul Samuelson, economist.

Economists have predicted 10 of the last three recessions.

Economists have predicted five of the last three recessions.

For indeed, the investor’s chief problem and even his worst enemy, is likely to be himself – Ben Graham in The Intelligent Investor

If Santa Claus Should Fail to Call, Bears May Come to Broad & Wall. [Trader’s myth that if we don’t see a “Santa Claus rally” in December, the market will decline in the coming year.]

If you’re going to panic, panic early.

Insanity is doing the same thing over and over while expecting different results.

Investors headed for the exits. [Euphemism for a sell-off with traders and speculators taking profits.]

It ain’t over till it’s over. – Yogi Berra

It’s only when the tide goes out that you learn who’s been swimming naked. – Warren Buffett

It’s the economy, stupid! – political consultant James Carville.  Whether we’re talking about politics or the stock market, the central concern is still the same: the economy.

I used to think that if there was reincarnation, I wanted to come back as the President or the Pope. But now I want to be the bond market: you can intimidate anyone. – political consultant James Carville.  Fixed income may seem simple, but is far from it.

Look out below! – bearish trader’s reference to an expectation that a stock will decline dramatically

Markets can remain irrational longer than you can remain solvent. – John Maynard Keynes

Never make forecasts, especially about the future. – Samuel Goldwyn

Never sell a dull market short. – A trend-less market could go either way and is therefore overly risky for shorts.

Never short a dull market. – A trend-less market could go either way and is therefore overly risky for shorts.

Never try to catch a falling knife. – something you don’t want to do.  The idea is that if something is falling you could get hurt trying to catch it in mid-flight.  Better to let it stop falling and pick it up safely.

Nobody rings a bell at the market bottom.

No one ever went broke by taking a profit. [Euphemistic excuse for closing a position out of fear that it may decline.]

Nosebleed levels.

Obvious prospects for physical growth in a business do not translate into obvious profits for investors. – Ben Graham in The Intelligent Investor

October. This is one of the peculiarly dangerous months to speculate in stocks in. The others are July, January, September, April, November, May, March, June, December, August, and February. – Mark Twain

Past performance does not guarantee future results. [Standard disclaimer for mutual funds.  Translation:  ignore all these performance statements and accept the fact that future performance is unknowable.]

Pounding the table. [Euphemism for arguing a position strongly in the face of the market moving the opposite direction.]

Priced to perfection. Said about stocks or the overall market (but can apply to any asset), implies that stocks are overvalued.  Specifically, that stock prices already assume best-case improvements in fundamentals that are not credible.

Sell in May and go away – ‘historically’, investors have done better by selling their stocks in May and buying them back in November.  In other words, the months from May through October are supposedly a ‘bad’ time to be in the market.  Ned Davis Research is alleged to have said that their research indicates the optimal ‘bad’ period (based on history) lasts from the sixth trading day of June to the fifth to last trading day of October

Sell into any rally.

Sell into strength.

Sell to the sleeping point. – if you are troubled by an investment but still desire to hang onto it, sell just enough so that you can feel that you’ve ‘dealt’ with the anxiety and can calmly sleep at night, but you’ve kept enough to feel comfortable with what you have left.

Sellers of greed and buyers of fear. – the contrarians mantra:  sell what the crowd wants to buy and buy what the crowd shuns.

Stocks are still overvalued.

Stocks got ahead of themselves.

Stocks have gone too far, too fast. – How stocks normally move in a bull market.

Take some money off the table. – Mostly a ruse by brokerage firms to con investors into selling stocks (and possibly buying them back later) so that the brokerage firm can collect commissions and transaction fees.

Taking profits. [Euphemism for selling a profitable position out of fear that it may decline.]

The company mints money. – Speculator’s euphemism for a profitable company.  Usually associated with ‘touting’ a stock rather that being a dependable characterization of the future potential of the company and its stock.

The fundamental business of the country, that is production and distribution of commodities, is on a sound and prosperous basis. – President Herbert Hoover, Saturday, October 26, 1929 commenting on “weakness” in the stock market.

The market has gotten ahead of itself.

The market hates uncertainty.

The market is overbought.

The market is oversold.

The path of least resistance is down. – a rationalized belief that a downwards trend will continue.

The path of least resistance is higher. – a rationalized belief that an upwards trend will continue.

The path of least resistance is lower. – a rationalized belief that a downwards trend will continue.

The path of least resistance is up. – a rationalized belief that an upwards trend will continue.

The trend is your friend.

This company mints money. – Speculator’s euphemism for a profitable company.  Usually associated with ‘touting’ a stock rather that being a dependable characterization of the future potential of the company and its stock.

This information, obtained from sources believed reliable, is not necessarily complete nor is it guaranteed. – standard disclaimer.  Translation to English:  All bets are off.

This is a stockpicker’s market – Implying that the overall market trend is fairly flat, bearish, or simply choppy and that the only safe way to get decent returns is to pick stocks that have more positive momentum than the overall market.

When the tiger is away, the monkeys rule the jungle. – without leadership, we get chaos.

Where are the customers’ yachts? – from the title of an amusing book by Fred Schwed, Jr. about the shenanigans that go on on Wall Street

You can’t go broke by taking a profit. [Euphemistic excuse for closing a position out of fear that it may decline.]

You’ll never go broke by taking a profit. [Euphemistic excuse for closing a position out of fear that it may decline.]

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