This excerpt below comes to us from Louis Gave of GaveKal, courtesy of John Mauldin.
"Most investors have a natural tendency to project their most recent experiences far out in the future."
This is a dangerous behavior which can have disastrous results.
In working with investors we've seen this far too often.
Currently = clients reflect upon their % losses or $$ losses and extrapolate them forward into to the future...which quickly leaves them 'broke!' Or, 'I'm going to loose it all !'
Early 2007 = 'Does this thing have any China in it ? How about emerging markets, gold or oil ? That's what's making the gains...'
The same was true in the summer and fall of 2002 and the early winter / spring of 2000. (9)
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