“If people weren’t wrong so often, we wouldn’t be so rich” - Charles Thomas Munger
R.I.P. Legend.
Charlie, of course known for his fundamental analysis alongside Warren Buffett all these years, was a closet Technician at heart.
His analysis of human behavior was top notch, particularly misbehavior and stupid behavior.
His comment to Warren about the reason they were so rich was because people are so often wrong, was spot on.
If you've been paying attention, we use this to our advantage quite a bit.
For example, twelve months ago Wall Street strategists forecasted an outright fall for stocks in 2023, the first time this century that they had predicted a loss...
Last night was our LIVE Mid-Month Strategy Session. It was probably one of the most important Live Conference Calls we've ever held.
It's odd because we're in the middle of a raging bull market, but it feels that almost no one is participating in it.
Just look around. Over the past 18 months people have told me how crazy I am for buying stocks. But you know, it's been really rewarding buying stocks.
It's the selling of stocks that has generally not worked out very well for investors.
But what do we do now, as we enter the early stages of the most bullish time of the year?
The Nasdaq100 index just went out at the highest levels in history relative to the much broader Russell3000 Index.
Technology represents about 50% of the Nasdaq100, with Apple's weighting coming in at 11% of the index and Microsoft currently at just over 10%.
But the Nasdaq100 is a good representation of these mega-cap names, because Amazon, Google, Meta and Tesla all carry huge weightings. Remember, none of these stocks are in the Tech Index.
So the Nasdaq100 broadens it out to what most people consider "Tech".
Here's the QQQ hitting new all-time highs relative to Russell3000:
Sometimes investors forget that there are 500+ stocks in the S&P500, 30 stocks in the DJ Industrial Avg and approximately 3000 stocks in the Russell3000.
This is all free and public information.
But still, investors forget, especially during times when it's most important to remember.
That's just human nature.
We take things for granted until we need them the most.
This quarter has been a prime example.
You see, while the S&P500 and other indexes were making new lows last month, the list of stocks making new lows had already peaked in early October.