Where Hope Meets Reality

Today we are participating in one of those manias only now it is called a bubble and still is not being taken too seriously. Yes, it is the stock market mania. Many are still trapped in the madness of the crowd of the 1990’s who believe the “market always comes back”. They are clutching their tulip bulbs, sorry, stock certificates, and refuse to let go of them because they know their value will grow back to what it was 3 years ago. Stock owners have become mad with what – greed? fear? denial?

When something, almost anything, drops 50% in price it will take a 100% increase in value to get back to “even”. With today’s economic and world conditions that could be a long time and maybe not in our lifetime.

Make money and the whole nation will conspire to call you a gentleman.

Years ago I heard a vacationstory.com">story about how they used to catch monkeys. A small hole just big enough for the monkey to slip his empty hand inside would be drilled in a coconut and candy and fruit would be put in it. The coconut was tied to a stake in the ground. When the monkey grabbed a fistful of goodies he would not let go even when the hunter came for him. Greed holds him in an invisible grip.

Many investors today are like those monkeys. They refuse to sell what is remaining of the stocks and mutual funds they own even though they can clearly see the major trend continues down. They became mad with greed and now fear of loss entraps them.

Until this madness is recognized investors will continue to see their ring_The_Two_Types_Of_Contracts.html">portfolios become smaller and smaller. They must learn to let go.