I’m extremely fortunate to have a front row seat to the most incredible display of human emotions in the history of mankind. Every day I get to watch markets move up and down based on fear and greed competing with one another at all times. One of the things I find most interesting is how humans tend to behave at the beginning of a perceived cycle. For you guys who think these psychological events don’t impact the stock market, you’re crazy. Seasonality is something I study very closely, particularly when markets ignore seasonal tendencies.
It’s early January: New Years resolutions, new fiscal calendars start for businesses, new tax consequences, the end of the holiday season, the end of spending more time with family, and a long list of silly things we convinced ourselves we’re going to do just because it is a new year, in this case 2017. The fact that all of these cycles coincide is impossible to ignore. We see big changes in human behavior in the Spring and Fall as well, although not to this extreme.
As market participants, we need to do a few things. First, I think we need to recognize that these cycles are indeed taking place. It’s happening all around us, even in our own homes. Second, because others are not aware, or simply do not care, we can use this information for profit. So it’s not just about this being a new year, the point is to recognize where we are in that cycle and then use that information for profit.
There are many ways I think we can profit from today’s current environment, and I share that research here for Members of All Star Charts. While everyone is busy focusing on themselves as we enter a new year, let’s remember that we that are still market participants at the end of the day and the only reason that we are here is to profit. There is no other goal in investing in markets. It is unacceptable to allow this collection of cycles ending to change one’s perception of both our market approach and our view of the current market environment. We take the data as it comes along, considering all factors, in the same invariably consistent approach, regardless of whether it is January or July or October.
I think sometimes it is important to take a step back and really observe this human behavior and take it all in. It is quite obvious that it’s happening. While we’re doing nothing wrong, it is still necessary to recognize what we’re doing, how we’re behaving and why. As market participants, there are advantages to this recognition of both our own behavior and that of others.
Look around. It’s all over the place.
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