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Value investors don’t follow the hype, or forget the lessons of history

24/11/2021

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Don’t follow the bull market hype: Over time markets will go through cycles and the pack of investors will go through periods when they invest in quality and use a more selective and risk adverse approach to their stock picking. But as their confidence grows in a rising market, these investors can get carried away.
As the market continues to grow beyond expectations so does the inexperienced investor’s frenzy to follow the latest fad and fashion.
These investors get so caught up with the prospect of making a quick buck, they fail to follow a rational investment strategy undertaking a fundamental evaluation of stock.
Shares are bought and sold on the basis of tips and superficial knowledge, investing without clear understanding and calm reflective thought.  Investors seem to have an almost infinite capacity at times to believe in something too good to be true.
It will, at some point, dawn on the crowd that some players have cut their losses and figured out that things have gone too far.
Like sheep, group panic sets in as everyone runs for the exit.
Unfortunately, the aftermath of these bull markets is not a pretty sight and most of the followers go home empty handed.
My advice would be to stay clear of the markets that have lost touch with the fundamentals. Don’t try to play the greater fool game – buying even though you are not convinced of the fundamental value in the hope of selling the stock on to someone else before the market decline comes – you might end up being the biggest fool.
Don’t forget history’s lessons
A value investor requires a
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    Prof. Glen Arnold

    I'm a full-time investor running my portfolio from peaceful Leicestershire countryside. I also happen to be UK´s best selling investment book author and a Financial Times Best selling author.

    Originally, I wrote all my ideas out in full on this website. Now that ADVFN publish them they are entitled to display the full version for six months – you can see them here. Thus can I only post the first few paragraphs here for anything younger than six months.

    I write 2 to 3 newsletters per week - investing is about making the right decisions, not many decisions.

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In the short-run, the market is a voting machine – reflecting a voter-registration test that requires only money, not intelligence or emotional stability – but in the long-run, the market is a weighing machine.  Benjamin Graham




  • About
  • Newsletter
  • Books
    • My Books
    • Other Books
  • Blog
  • Portfolio
    • Buffett-style
    • Modified price earnings ratio
    • Net Current Asset Value
  • Resources
    • glossary of investment terms >
      • A - B
      • C
      • D - E
      • F - G
      • H - I - J - K
      • L - M - N
      • O - P
      • Q - R
      • S
      • T - U - V - W - Y - Z
    • TOP 10 TIPS FOR INVESTORS