Casaubon,
In fact, they don't know any better than to sit through corrections. J6P doesn't know to cut losses and therefore gets left holding the bag (empty of course).
You are exactly right. I talk to the guys I work with that may say for instance: "The market was up yesterday". When in actuality, the DOW may have been up but the NAS, SPX, DOT, ect was down. Most of J6Ps look at their monthly statements and the DJIA, and that's it!
I have heard numerous comments (from 55 and 60 years olds) like, "As long as I still have my principal." or "It will come back up eventually."
I have also seen them take losses, but it was at the very bottom of corrections or selloffs. Most "investment advisors" urge J6P to "invest for the long haul".
I am of the opinion that institutional investors move the market one way or the other and J6P does not move it at all. Selling 200 shares of DELL will not make a down tick but selling 250000 shares surely will and I don't know a J6P with 250K shares of anything.
There is another mode of thought among J6P. They buy a stock. It goes down. They say "Well, I can't sell now, I'll lose money." Then when the stock goes back up above break even they say "I think it's going higher." When fear erodes, greed takes over.
If this market tanks next week, it won't be poor J6P selling.
Chris |
