Is This Golden Hour for Investors?
It would be really useful if brokers asked a simple survey question every time an investor hit the buy or sell button; ‘why?’ There’s always a reason, efficient or irrational, long-term or short-term. The best-performing investors over the next thirty years will be those who can mind-read the market. UBS is making a start!
The Wall Street giant has been charting the bullishness and bearishness of wealthy investors. According to their data, more than half are waiting for indices to fall further before buying. One quarter is already investing big, and only 16% of the most successful market players are coiled in fear, not buying stocks because stocks are down.
It’s worth remembering that investors are not always honest, with themselves or others, and that cash is king. According to Bank of America, these same investors were selling on the way down. There’s over five-trillion-dollars of dry powder waiting to reenter the markets at lows. Traders are trying to get their timing right and catch a bottom.
Whether investors should try timing the big booms and busts is contentious, even among billionaires. You have the Warren Buffett’s of the world who believe in patience, staying invested all the time, and normalizing the business cycle in your mind. Then you have the Ray Dalio’s who love a global theme and a “big picture” bet.
It’s important to discover your own answers, and one of the ways to do that might be to throw some darts at the board and see where they land.
If you draw an event path for vaccines by summer break, thanksgiving, or Christmas, and then guestimate the stock market reaction to each scenario, you can look back at your prediction in the future and learn from it. Then predict the next few months again, and again, and again, gradually featuring more stocks until before long, nothing surprises you!
