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The Flight Into Equities
If we believe the televised pundits or monopoly media headlines, America and the world are going to hell in a hand basket. /If it bleeds it leads. /
On every market pullback since Dow lows of 6469.95 on Friday 6 March 2009, anxious cynics and skeptics have said “I told you so.”
Meanwhile in our Long Term Charts with Hearts Public Portfolio:
http://stockcharts.com/def/servlet/Favorites.CServlet?obj=ID3251493,
the $BDX Baltic Dry Index is up +301% from December lows, AFL AFLAC is up +247% and the $BKX Bank Index up +146% since March 2009 lows, while
the $XAU Gold and Silver Index is up 137% since October 2008 lows.
Even the dinosaur Dow 30 are up 32%, a far cry from the headlines.
After a half century in markets starting with gold and silver coins, we
are used to this. People are most confident at the top and most fearful
at the bottom. They evoke or seek tortured logic to reduce anxiety and convince themselves they are right. Psychologists call this cognitive dissonance.
Stanley Milgram did his famous experiment on authority that found people will kill people if someone in a white lab coat said it was ok. Too many people listen to popular pundits for financial decisions, and suffer serious financial loss as a consequence.
They buy when they should be selling, and sell when they should be
buying. In 2000 and 2007 /everyone/ was wedded to stocks. Nary a
monopoly media headline said /Get out of debt, lighten up and get
liquid./ In 2007 everyone thought real estate was the path to prosperity
and few headlines said /Sell now or regret later./ Monopoly media
headlines trumpeted the ownership society. Pity.
If we look at the Long Term Charts with Hearts at
http://stockcharts.com/def/servlet/Favorites.CServlet?obj=ID3251493 we
see the obvious in hindsight with $INDU, the Dow 30 stocks and $DJR Dow
Real Estate Investment Trusts: It paid to buy low and sell high long term.
