Could Capitulation Actually Mean Getting Invested?
December 18, 2019 at 08:00 AM EST
One unique aspect of markets is that they are driven by the human emotions of fear and greed. Nobody wants to miss out on a bull market move higher, but investors simultaneously hesitate from fear, seeing how the move has already traveled so far without them. As a result, they wait on the sidelines until suddenly the pain of missing out is overcome by to greed, causing investors to jump in with both feet, often at the top. This cycle is what drives markets higher and then allows them to come back to earth. As famous stock trader Jesse Livermore said, “Markets are never wrong – opinions often are.”