Don't Get Too Bearish: Market Tends to Be Up 80% of the Time
Ever wondered why so many people rally behind permabears, even when their track record suggests they're often wide of the mark?
Lately, I've found myself mulling over this question. It seems that investors may sometimes rationalize their views incorrectly, especially in the face of losses.
They console themselves by saying, «Well, at least I didn't lose more capital,» as they hastily exit the market.
Here's the basic idea: if you're bullish, you profit when stocks rise (essentially, you're betting on an upswing), and if you're bearish, you make gains when stocks fall (taking a short position in the market). Makes sense, right?
But here's the twist: while this approach might seem logical, it's not always the wisest course of action to remain steadfastly bullish or bearish.
By doing so, you're reducing your exposure to price fluctuations and shifting your funds from stocks to cash in an effort to minimize risk.
However, in the quest to eliminate risk, you also forfeit potential gains, whether your bearish or bullish prediction proves correct or not. In fact, to achieve our financial objectives, it's essential to stay in the market and endure the occasional bouts of short-term turbulence.
So while the market is definitely giving investors many short-term bearish indicators, the trick is to adapt accordingly without losing focus on the long-term strategy.
Let's take a look at the current state of the market.
Meanwhile, the US dollar is once again in focus as it stages a robust comeback with a gain of over 5% following a 3.5% dip in July.
What makes this particularly noteworthy is that the current DXY level represents a significant psychological resistance point, based on its historical rejections and struggles to break to
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