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Ignorance of media

It is truly stunning how ignorant people are when it comes to stock market and investing.

In many human activities and jobs people usually go and educate themselves before they participate in that activity. If one wants to become a dentist, he or she goes to school and spends 10 years educating herself. If another person wants to be a lawyer, it is the same, he goes to school and spends a lot of time in school before he becomes a lawyer. And same goes with a surgeon, and engineer, and even a machinist or operator in a factory.

But when it comes to investing you can be as dumb as a log and participate in the stock market, lose all your money, blame the government and other participants for it, and then publish your own opinions and present it as a fact.

Everybody is now worried that this market is over. That this market pushes itself to the end. This is what was published in media recently:

 
Media
 

All it takes is a perspective. In my previous post I said that all data point to a high probability of this market being at the beginning of something big. Of course, it may change any day and we need to watch this market on a day to day basis to see if anything is changing or not. As of today, we have no indication of the market changing but rather be at the beginning of a new strong rally from a recent breakout.

Here is a picture I posted in my previous post:

 
Weekly Results
 

Let’s zoom into the most recent period of time.

 
Recency bias
 

When people look back, 23 years into history, all they see is a market which failed them a lot in the past. They saw a new high and a large selloff, then recovery and selloff again, and again. No wonder that today, they say: “We have seen this before!”

And media are propagating this also as you could see above. Same young inexperienced people are now looking back 10 years behind and think that they know everything. Yet they are missing the big picture.

It is true, we have been in this before! But not in a way as others and media think.

We have seen this market rallying up, then consolidating the gains, rallying again, and so forth. When the markets broke from previous consolidations people too were scared and predicted the market to crash. All they remembered was a short term picture of long consolidations and when the market broke, they screamed: “We are doomed!”

But then, the markets made new highs and delivered new gains. and many doomsayers stayed aside because they didn’t believe what was developing in front of their eyes.

 
Recency bias
 

The gains listed in the chart above and time frame (18 years and 205% gains, and 17 years and 998% gains) do not include time and gains the market provided from the bottom of the consolidations. The last 10 years, from the last consolidation low is not included:

 
Recency bias
 

Of course there will be corrections and selloffs on the way up into the new highs but these will be just a great opportunity to buy stocks from weak hands. This is not a prediction of what is going to happen. But there is a high probability of this development in the markets in the next decade or more.

Recently, I purchased my brand new crystal ball to predict the market.

This is what has arrived:

 
Recency bias
 

With this crystal ball I will only be 50% correct in predicting the market! So be careful!





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