Sangfroid~ Key for enjoying health and prosperity in the markets.

February 22nd, 2010 by Rich

All American Merrill Market Analyst Bob Farrell quantified this in the 1970s.

He viewed odd-lot margin accounts or odd-lotters selling short as the classic wrong-way Corrigans.

When the margin accounts bought, it was time to sell. When the odd-lotters sold short, it was time to buy. That is, if you wanted to make money.

Mr Farrell wrote an interesting essay, Weep Not for the Individual Investor. It was published in Business Week, famous for its Death of Equities cover near the 1982 bottom of the market, a classic market signal for contrary opinion investors.

In his careful article, Mr Farrell pointed out cash accounts outperformed margin accounts, something Mr Buffett referred to as not relying on the kindness of strangers.

Mr Farrell and Mr Buffett showed Individual accounts could outperform professional institutional investors.

Even big money managers can get emotional if caught on the wrong side of the market.

Money managers can become lemmings leaping off the cliff in herds.

This is possible when greed or panic strike social networks, particularly in concentrated financial centers like The City, New York or Los Angeles, with their normative investment journals.

With Financial TV and internet today, more people can make bigger moves at the wrong time.

And an investment committee can generate average investment results.

Three classic individual illustrations of this independent investment theorem contrary corollary might be Warren Buffett in Omaha, the late Sir John Templeton in Lyford Cay, or the late Phil Fisher in San Mateo, with a handful of long-term loyal clients holding Common Stocks for Uncommon Profits.

Living in Hawaii and the mountains gave us plenty of time to see markets more clearly, far from the noise of the madding crowd.

http://en.wikipedia.org/wiki/Far_from_the_Madding_Crowd

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This entry was posted on Monday, February 22nd, 2010 at 7:58 pm and is filed under Prosperity. You can follow any responses to this entry through the RSS 2.0 feed. You can leave a response, or trackback from your own site.

2 Responses to “Sangfroid~ Key for enjoying health and prosperity in the markets.”

  1. Vahram Says:
    February 26th, 2010 at 4:25 pm

    Rich can you enlighten me on what the Big4 and TopTen is? I see you mentioning it now and then in your posts. I’d be interested, even if you could email it to me.

    Regards

  2. Rich Says:
    February 28th, 2010 at 7:13 pm

    Aloha Vahram
    Big4 is a Weekly Asset Allocation Report of the net position of the four largest traders in each asset category for $2000 a year with a money back guarantee if ideas do not cover costs in a year.
    TopTen is a Seasonal Portfolio of Closely-Held Dividend Discount Values with the same money back guarantee for $1000 a year.
    Subscribers repeat and grow because of performance through various market cycles.
    Expired copies of back issues to protect current subscribers were sent to your private address.
    Regards*Rich

 

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