investor complacency

A Time to Fear

I.C. Angles Investment Post

“Be fearful when others are greedy, and greedy when others are fearful.” – Warren Buffett, legendary investor

Recent volatility in the stock market has served as a barometer of investor sentiment and in my analysis only further confirms my recent market call, that regardless of near term price action, long-term investors should now be fearful of stocks. Most investors far too often end up buying high, selling low and realizing disappointing returns. A case in point is the current bull market that began in 2009. For the first few years, when prices were considerably lower, investors were much more fearful than now and inclined to sell or shun stocks. Of course that is what makes for a stock market bottom and the start of a new bull market–the investment herd selling their stocks, when things are at their worst. And the financial media only serves to exacerbate matters. Pushing stories of risks around depressions, financial calamity and double-dip recessions, when the market was bottoming. But that was actually the best time to be greedy. Now prices are much higher. And the investment herd is greedy to get a piece of stock market gains, while the financial media is favoring stories about how pull backs are buying opportunities. In my opinion, now is the time to be fearful and instead use rallies as selling opportunities… that is if you’re goal is to go contrary to the herd by buying low and selling high.


Three Warning Signs

I.C. Angles Investment Post…

As the stock market struggles to make new highs, investors are increasingly complacent despite worrisome developments. Yet, the U.S. stock market itself is looking increasingly shaky. Worrisome signs are also growing around the U.S. housing sector critical to America’s economy and China’s economy, which has been an engine of growth for the global economy. Although the price action of this stock market remains healthy enough to justify holding a substantial amount of stocks in a long-term portfolio, this does not justify complacency or in my view significant stock exposure for investors with shorter-term time horizons, particularly in light of growing bearish signs.