Greedy Investors Proving Rule

Willful Ignorance? - Willful ignorance is such an emotional-based confidence building way to operate. Right now we are seeing how it is causing institutional and individual investors to increase their exposure to riskier investments. If you're one of these people, you should be able to say the following out loud, without wavering in your Bullish beliefs. "I have full faith in the Fed changing its decades' old approach and finally lowering rates, even in an election year." "Stocks are at record levels, so that means they should continue to rise because a ceiling has been punctured." "Cumulative inflation isn't as important as consumer prices not increasing as much as before." "The increase in the non-elites' personal debt to maintain their lifestyles won't have any detrimental impact on the economy." "Ever increasing U.S. Government debt has no detrimental impact on inflation." How's your confidence in a soft landing after reading these current positions right now? Let's be honest, here.

Its Not Your Fault - Whether or not your confidence in an ever increasing stock market took a hit from reading the above positions out loud, it's not your fault. As I noted in my book, Money, Balance, Joy - Improving Your Life Story (Amazon), there is plenty of research that shows that individual and institutional investors usually increase their risk exposure (greed) at the point where the odds are greater for a sharp decline or extreme volatility because of obvious red flags that only are noticed after the fact (think The Great Recession). Also in my book, I reviewed the studies that show that people decrease their risk exposure (fear) at the point where the odds are greater for a sharp increase in stock prices. In essence, right now the market players are doing the opposite of what someone does with card counting. And, card counting is allowed with playing the markets. Why? Because when done right the casinos would lose their shirts.

Playing the odds, not being played by the odds - Hopefully we all can agree that the above "buy high and sell low" scenario should be avoided in order to realize long-term returns that are closer to matching the markets. Taking the card counting of approach to determine the true odds, instead of a finding signs of hope, is the best way for us to have more enjoyable lives of money, balance, and joy. Or, we can keep betting against the house on their self-favoring terms.

Michael Sakraida is the author Money, Balance, Joy - Improving Your Life Story (Amazon) Email him at mike.s@moneybalancejoy.com with questions or a free initial consult.