The markets are like trying to ride a bull while drunk being mauled by a bear. As a Canadian this appears rarely more evident than in the last few months. Since Brent US Crude fell from what many were calling its absolute bottom, $60 USD, to where it is now ($29 USD), and Western Select even worse, the markets have become awash in emotion. In some ways I envy the days past before computers, when an investor would have to pick up a phone and call the broker to know the markets. The ability to swipe down on my phone with the hope of riches gained, only to see a sea of red, is like being the only one to show up to the party of the century. Multiple times through the day, swipe…… fear. Swipe. Fear.
We tend to have an undue confidence in our home country, no matter what the data shows. Canadians are more likely to invest in Canada (Home country bias), Americans in America. I am 5% susceptible to this (It is quite measurable!), so I’ve gotten the joy of seeing 30% of my portfolio in ETF’s such as ZDV drop double digits % in just over 3 months. The same forces driving down Canada are also driving down the rest of the world. It is my belief that the market drivers have lost sight of how the markets work. The current environment feels almost fraudulent in how prices are being depressed. Due to the analysis of many smarter people than myself (moneygeek being my favorite one) I am able to derive a full picture.
It is thus that I do what is expected of me and predict. What market analysis would there be without a prediction? Within the next year, the lack of sustainability will culminate in cascading covered shorts and speculators pulling the plug on depressing prices. With this added pressure, prices will rise in spectacular fashion to more normal levels. I’m not saying we will go back to $100 USD oil, just that it will go up, and quick, to prices that make more sense such as a $40-60 range, more in line with historical inflation adjusted running averages.
How does one handle the emotions of investing? The only way I know how is to research, and forbid myself to trade with any button indicating “Sell”, unless I discover a toxic balance sheet and the underpinnings of a failing company. I took every last bit of my savings, and access to capital in the last three months, and poured it into the vacuum created by the recent world selloff. Most of that purchase has since, on paper, been erased, to come roaring back if my research is to be believed.
(As always, do due diligence and your own research. I am not liable for any following of my ramblings)