Investors are not very smart people...
Before I start making my point, let me first apologize to all investors for the title of my post. I didn't really mean it like that...
However, I just can't get over the fact that 95% (my rough estimate, not based on scientific data) of the investors (including our CAPS population) during these last 8 months kept repeating the same mantra(s): This is a fake rally; This is a junk rally on low volume, Market can't stay this irrational for long, gains like these can't hold; Market will collapse; This can't be happening as it hasn't happened ever before; Market will be back to 666 by the end of the year; What a crazy market, so unpredictable, blah, blah, blah.
I hope you got the picture (and recognized yourself or someone you know).
Now, let's just take a simple look at these 2 charts:
S&P 500, March 1, 2003 - December 30, 2003
S&P 500, March 1, 2009 - December 30, 2009
And, what do you see? Yes, the exact same picture.
SAME. NO DIFFERENCE. Other than the numbers on the left of the charts. In the first chart, market started around 850 and finished the year at 1100, and in the second chart, market started around 670 and ended the year around 1100.
But the lines look the SAME. Same small corrections (no major ones) in both of them. Same small dip in November, and the same final run in December. And both lines started going up (after the bear market) almost on the SAME DAY. They even had the same "fake" rally in the month of November the year before (not shown in these 2 links).
I mean I can go on forever: EVERYTHING IS THE SAME. No big corrections, no collapse. Same start date, same moves, everything the same (but the volume did triple though...).
So my question is: How is it possible that majority of investors failed to see this???
2003 was just 6 years ago. How did we forget so easily what happened at the beginning of the last bull market? HOW? Market throws a curve ball with a stronger than expected bear market, and we forget just like that? Incredible, I mean INCREDIBLE...
Good Luck in 2010 Everybody!
p.s. If you are now thinking something like: "It's easy for you to say this now when the year is over (hindsiht is 20/20)", please keep in mind I'm the Mister Cleo... :)