·
Market
entering “exuberance” stage: Berinyi…Interesting article out today from
Bloomberg News that states that individuals are pouring money into the stock
market based on increased “confidence” in stocks. Also, long-time market
strategist Lazslo Berinyi of Berinyi, recently stated that the stock market is
entering the fourth and final “exuberance” stage of the bull market.
·
What’s
the point? “Contrarian” market lore claims that individual investors get
back in to the market near the top, when their confidence has increased and
they get tired of watching the market rise without benefitting personally; in
other words, they start to react emotionally (in this case, greed). Unfortunately, the “lore” has some validity
(it also works in reverse at or near the bottom of a bear market). This was one of the factors that led us to
slightly reduce our equity exposure in Q3. Truth is, no one knows what the
stock market will do, particularly in the near term. We believe the best way to
manage wealth through the ups and downs of the stock market is through a
disciplined approach that downplays the emotional aspect of investing, reduces
the temptation to “time” the market, and focuses on appropriate portfolio diversification
and fundamentally-based decision making. Studies show that properly diversified
portfolios provide superior risk-adjusted returns over the long term compared
with overly concentrated portfolios. Link: http://finance.yahoo.com/news/individuals-pile-stocks-pros-bull-083111149.html
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