A contraian look at the investment cycle

[Willers]

I ran across this comment on the investment cycle (and the role of wall street and the media) in a recent Morningstar article and thought some of you would find it interesting/amusing:

"The natural cycle of investments works like this:

1. An asset performs well.
2. Wall Street notices.
3. Wall Street markets that asset.
4. Journalists cover what Wall Street markets.
5. Investors buy what journalists cover and Wall Street markets.
6. The asset becomes overpriced.
7. Investors buy even more of the asset.
8. The asset declines in value.
9. Investors grow concerned.
10. The asset declines further in value.
11. Investors sell the asset.
12. The asset languishes.
13. Wall Street does not market the asset, nor do journalists cover it.
14. Return to step 1"

 

[REWahoo]

A contrarian look vs. the old standby?

Investor Psychology:

 

[Mulligan]

A contrarian look vs. the old standby?

Investor Psychology:

There can be so much truth in humor!

 

[traineeinvestor]

Or in pictures:

http://1.bp.blogspot.com/_wDzTfNbQd...Y/gaOSibnEZ5A/s1600/stock-market-cartoon1.png

 

[siamond]

Thanks for sharing those images. VERY FUNNY. And very true. Which is maybe not so funny when you think about it... Anyhoo, this did give me a good laugh.

 

[FinancialDave]

I ran across this comment on the investment cycle (and the role of wall street and the media) in a recent Morningstar article and thought some of you would find it interesting/amusing:


"The natural cycle of investments works like this:

1. An asset performs well.
2. Wall Street notices.
3. Wall Street markets that asset.
4. Journalists cover what Wall Street markets.
5. Investors buy what journalists cover and Wall Street markets.
6. The asset becomes overpriced.
7. Investors buy even more of the asset.
8. The asset declines in value.
9. Investors grow concerned.
10. The asset declines further in value.
11. Investors sell the asset.
12. The asset languishes.
13. Wall Street does not market the asset, nor do journalists cover it.
14. Return to step 1"

It not interesting or amusing - just the life of an active fund manager and their investors!

 

[foxfirev5]

Looks like we're at about step 8 -10 for emerging market equity funds.

 

[Willers]

Looks like we're at about step 8 -10 for emerging market equity funds.

+1 The herd appears to be on its way out. It will be interesting to see how the July inflow/outflow numbers look.

End of June data:

"LONDON, June 28 (Reuters) - Investment funds dedicated to emerging market equities have posted record monthly outflows in June, shedding their entire year-to-date takings, banks said on Friday, citing data from EPFR Global.

It was the fifth straight week of outflow for equity funds which lost $5.6 billion in the week ended June 26, according to the Boston-based fund tracker which releases weekly data to clients late on Thursday.

The data showed that on a monthly basis, dedicated emerging equity funds suffered $19.86 billion in outflows in the four weeks of June, outstripping the previous record set in January 2008, when $18.7 billion fled the sector."