There is room for bulls and bears, but pigs get slaughtered

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Doing stupid things is what most individual investors throughout history have always specialized in. They seldom learn from their mistakes. If they decide to hitch a ride on a bubble when it is on the way up thanks to the greed factor, make sure they remember to bring a parachute for when it inevitably pops. Some investors and traders who were “born” in the markets after the Great Recession in 2008 have made good money from risk assets over the years thanks to the massive money creation by the self-serving central bankers who do not eat and drink based on their official inflation numbers. So, they have no experience whatsoever with losing money in investments. 

Those investors have not lived through the financial market crashes such as the dot-com crash of 2000-2002. I was there when the tech stocks crashed to earth. At the peak of the crazy party, I could still remember that anything that was vaguely related to the internet was enough to impress the pretty girls at the bar. I was also there in 2008, a year when all the great lies engineered by the free market capitalists with hidden agenda on Wall Street unraveled and puked the markets. The market cap of Citibank dropped from $200 billion to $20 billion. I did not lose any money back then because I held on to positions in currencies and commodities.

I was told that rational investors are risk averse. That means they are more sensitive to losing money than they are to gains. Hardly a day goes by when someone does not ask me when this or that is going to burst? They are right to be worried. I have discussed all that in another premium publication before this. There are some really attractive opportunities out there which are basically a gamble to me. It is like going to the casino using the money that I can afford to lose. I do not like going to the casino.

No foul language, please. Another problem is that there are a lot of scammers who are fueling the bubbles everywhere. You just have to look at their seminars and their goal is to sell the “dream”. They want to excite you in order to make money. Is your interest under consideration here? Sorry, not at all. Beware of any sales people flaunting their luxurious lifestyle, with expensive cars and jets to buy your confidence and as a proof of their investment track records. I do not get jealous of them and I do not drive an expensive toy.

Not many lucky kids will love to hear this crap from me. Making easy money doing nothing can really screw up a person, especially at the early life. It is all about hard work. An investor is right to point out to me that private investors including the sophisticated ones in general dislike alternatives because first, they often do not understand them. Secondly, there is the view that alternatives in your portfolio are not needed, until it is too late to save anything.

How do you think your clients will feel if the market is down by 50%? In our show business driven by herd mentality, a traditional financial advisor with no skin in the game will be happy to tell his clients that the market came down 50%, but his diversified basket of mutual funds lost 49%. Just blame the short sellers. That is enough. Markets go through different phases in a cycle. It is good to have a mix of investment styles so that your money will work in all market conditions.



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