Find the few who see the trend turning, at either tops or bottoms, before it actually turns, and that’s the real pool of geniuses. From Charles Hugh Smith at oftwominds.com:
Until the system implodes–you’re a genius.
So you’ve ridden the markets higher–stocks, housing, commercial real estate, bat guano, quatloos, you name it–everything you touch turns to gold. What can we say, bucko, other than you’re a genius!
It’s a market truism that rising tides lift all boats. But that’s not the really important effect; what really matters is rising tides turn everyone into a genius–at least in their own minds.
Those of us who have been seduced by the Sirens’ songs of hubris know from bitter experience how easy it is to confuse a rising tide with speculative genius. When everything you touch keeps going higher, the only possible cause is…. your hot hand, of course!
Stocks–I’m a genius! Housing–I’m a genius! Commercial real estate–yes, well, I suppose the evidence is overwhelming–it does seem I’m a genius.
The only thing better than buy and hold is buy the dips and hold–and use margin or whatever leverage you have to buy more before the price goes even higher.
What can we say other than: this is the strategy of geniuses. The proof is in the charts:
The S&P 500: margin to the hilt and buy every dip: genius!
Housing in Sweden, Toronto, Brooklyn, West L.A., San Francisco, Seattle, Portland, Shanghai and every other blazing-hot market: borrow more from the shadow banking system, mortgage your house to the hilt, do whatever you have to do to get the down payment and buy another flat: pure genius!
To continue reading: A Rising (Central Bank) Tide Turns Everyone into a Genius