Maniac Investment

Let's first understand what maniacmeans. According to Webster a maniac is "mad;raging with madness; raging with disorderedintellect". You don't know anyone like that, doyou?

There is a book that is still inprint today that was originally published in1841 with the title Extraordinary and PopularDelusions of Crowds by Charles Mackay. Heexplains in rather horrific detail how peoplewere caught up in the madness of buying propertyin the South Seas in 1720, the numismatic coincraze of 1980 and the tulip bulb trading in1637. You wonder how people could have been sogullible to have bought a single tulip bulb orland they would never see for huge amounts ofmoney. Could anything like this ever happenagain?

I was floor trader on the commodityexchange in 1973 when the Hunt brothers drovesilver from $2.00 per ounce to $54. That manialasted a few months and quickly tanked to $6.00.I took part in that mania. I was one of themaniacs.

When it was taking place it seemedlike the thing to do and very few questioned thesanity of those participating. In fact, if youweren't part of the crowd there was somethingwrong with you. When there is a stampede it isbest to run with the herd or be trampled todeath. However, there were a few who were notmesmerized.

Today we are participating in one ofthose manias only now it is called a bubble andstill is not being taken too seriously. Yes, itis the stock market mania. Many are stilltrapped in the madness of the crowd of the1990's who believe the "market always comesback". They are clutching their tulip bulbs,sorry, stock certificates, and refuse to let goof them because they know their value will growback to what it was 3 years ago. Stock ownershave become mad with what ? greed? fear? denial?

When something, almost anything,drops 50% in price it will take a 100% increasein value to get back to "even". With today'seconomic and world conditions that could be along time and maybe not in our lifetime.

Years ago I heard a story about howthey used to catch monkeys. A small hole justbig enough for the monkey to slip his empty handinside would be drilled in a coconut and candyand fruit would be put in it. The coconut wastied to a stake in the ground. When the monkeygrabbed a fistful of goodies he would not let goeven when the hunter came for him. Greed holdshim in an invisible grip.

Many investors today are like thosemonkeys. They refuse to sell what is remainingof the stocks and mutual funds they own eventhough they can clearly see the major trendcontinues down. They became mad with greed andnow fear of loss entraps them.

Until this madness is recognizedinvestors will continue to see their portfoliosbecome smaller and smaller. They must learn tolet go.

Written 3/10/03 but still applies today.

INVESTMENT LETTER 3 month free trial.http://www.mutualfundmagic.com

RELATED ARTICLES

Trading Tips No 4: Technical Analysis The Holy Grail Syndrome
Everyone knows that the Holy Grail of investing and trading is a myth. Finding a good technical analysis tool that will give you a trading system that wins all the time is called the holy grail of trading. This means that one would never have a losing trade, not to mention consecutive losing trades, never have an equity curve drawdown, and after five winning trades in a row will just keep on delivering winning trades forever! There is simply no technical analysis or system that wins on every trade.

Investing Offshore for Retirement
As an expatriate you are in a privileged savings and investing position. Make the most of the options available to you while you can, consider investing offshore for your retirement.

Which IRA Is Best For You?
An Ira is one of the greatest ways to save on taxes currently and accumulate money for the future.

Should You Put Your Annuity in an IRA?
Let me start by answering that question...if an annuity fits your investment objectives than there is no reason that an annuity should not go in your IRA. Okay all you smarty pants out there who keep arguing that it is tax deferred and it does not belong in your IRA...SO WHAT??? The fact that it is tax deferred is only one reason why people buy annuities.

Online Trading Options Strategies - Rolling
Rolling is defined in options online trading as moving a position from one strike to another either vertically in the same month, horizontally to another month or some combination thereof.

Profitability And Stock Turn Rate
The inventory of the typical store represents the largest single element of its total assets. The sale of goods from this inventory is the merchant's chief source of operating profit. Thus, the way in which this merchandise investment is put to work is of utmost importance in achieving a profitable operation.

Tyranosaurus Rex
Everyone knows T Rex was the most fearsome of all dinosaurs. He could and did kill everything in his path for food or maybe stupid meanness. His brain was very small and he did not survive.

The American Age of Inflation is Over
"The American Age of Inflation is finished." So says economist Robert Samuelson in his December 2nd Washington Post column.

Almost Anyone Can Open A Roth IRA!
The Roth is kind of weird until you get used to it in terms of how much you can put in (contribute) each year depending on how much you earn (compensation). Because of this you really have two limits, one dealing with your compensation and the other dealing with your contribution. Let me explain.

Options Made Easy and Investor Education - Simple Enough for a 10 yr Old Kid
How many of you out there think that the market is performing well?

Stock Market Horizons: Gold $3,000, Oil $70
In the last two decades, even though gold prices have dwindled from $850 to $350 an ounce, there are still market gurus who predict gold price to hit $3000 an ounce. Hecla seems to be quite bullish about the future.

Why the Rich Keep Getting Richer
Rich people: fortunate, lucky, selfish, and arrogant? Or highly educated, caring, brilliant individuals? Becoming rich isn't hard, but it does require a bit of time and knowledge. Having time to get rich, educating oneself, and buying assets are the three key factors in attaining untold wealth.

Scots Beat Yanks in China Bank Deal
With visions of an ATM in every neighborhood in China, foreign banks and investment firms are queuing up to join the "China Club."

How to Setup a Profitable Trading Business
In my opinion trading is the most exciting and best way to earn a living in the world. With just a small amount of equipment and space you can do it from anywhere on the planet.

Your Worst Enemy To Successful Investing - The Media
How do you make your investment decisions and where do you get your information? If you're like most of the people I know, you look to the experts.

Waiting 20 Years Can Cost You Millions - Dont Wait Start Today
Many Young people live for Today. They really don't fully understand the power of compound interest. The Difference between investing as little as $20 a week at age 20 or waiting until age 50 can be over $3,000,000 (yes 3 Million). Don't wait start today!

Volatile Range
The stock market fell sharply Thu and Fri before and after the employment reports Fri morning. The Nonfarm Payrolls report showed 207,000 net jobs were added in July, which were 27,000 more than the market expected. Also, Hourly Earnings in July rose 0.4%, which was twice what the market expected. There's a strong inverse relationship between employment and profits, in part, because when employment increases, then productivity falls, which generally lowers profit growth. Moreover, some proportion of additional labor costs tend to come from profit growth when there is little slack in the economy. Furthermore, lower productivity is inflationary, ceritus paribus (all else equal).

The Arrow-Debreu Contingent Claims Model of Investment
Throughout the discussion of speculation and stability, we emphasized that uncertainty theorists now have a generally accepted framework for modeling choice under uncertainty. Economic theorists have chosen to model uncertainty as the revelation of a state of the world. Individuals in these models face investment and consumption decisions based on payoffs that vary across different states of the world.

Getting Started In Investing
Are you ready to open your pathway to financial independence?

Trading Expert Discovers Ways To Beat Stock Market Odds With Money Management
The first point to mastering money management is that you have to understand when you're trading on the stock market is that you are playing the odds ? but unlike many forms of gambling, you can make money. The key to making this money is to respect the risk that is part of the market, and manage it. Money management is a set of rules and guidelines that enables you to turn a profit. By being triumphant with your money management skills, you can keep your risk at a level at which you're comfortable with, keep from making poor trading decisions, and ensure you don't loose your trading capital. This is why it is so important to follow money management rules.

home | site map | www.1001topwords.com