Here's a statement of the obvious: The opinions expressed here are those of the participants, not those of the Mutual Fund Observer. We cannot vouch for the accuracy or appropriateness of any of it, though we do encourage civility and good humor.
Carl Richards, who covers finance and behavioral finance for them.
The set-up:
"According to the research firm Lipper, from 2006 to 2012 we withdrew more than $450 billion from United States stock funds. Then, in 2013, someone flipped a switch, and we decided we liked stocks again. Through the middle of December 2013, $60 billion was added to United States stock funds.
Think about this switch for a second. When the entire stock market had a huge 50 percent-off sale in 2009, no one wanted to buy. Now that the market is marked up 200 percent, we feel that it is time to get aggressive again."
The explanation:
"Stocks and other investments are the only things we rush to buy after they are marked up and hurry to return when they are on sale. We don’t care that we are losing money. Just take it back! We want out!
I know why we do it — we feel as if we have to. If feels like a matter of survival. We’re hard-wired to pursue the things that give us pleasure or security, but get away as fast as possible from things that cause us pain. When the stock market holds a once-in-a-decade sale, it’s scary. The news is scary. Your neighbors are scared, and then we get scared.
We think the only way to stop the pain is to get out."
Comments
Stay warm mfoers!!, Derf
The set-up:
"According to the research firm Lipper, from 2006 to 2012 we withdrew more than $450 billion from United States stock funds. Then, in 2013, someone flipped a switch, and we decided we liked stocks again. Through the middle of December 2013, $60 billion was added to United States stock funds.
Think about this switch for a second. When the entire stock market had a huge 50 percent-off sale in 2009, no one wanted to buy. Now that the market is marked up 200 percent, we feel that it is time to get aggressive again."
The explanation:
"Stocks and other investments are the only things we rush to buy after they are marked up and hurry to return when they are on sale. We don’t care that we are losing money. Just take it back! We want out!
I know why we do it — we feel as if we have to. If feels like a matter of survival. We’re hard-wired to pursue the things that give us pleasure or security, but get away as fast as possible from things that cause us pain. When the stock market holds a once-in-a-decade sale, it’s scary. The news is scary. Your neighbors are scared, and then we get scared.
We think the only way to stop the pain is to get out."
For what it's worth,
David