During a bull or bear market there's always "hooks" that keep people from riding the trend correctly or fully. By hooks I means excuses, facts, indicators, ect., which mislead you into thinking the trend in place is not sustainable and is due to end immanently. In the 1990's the biggest hook was the p/e ratio. By the start of 1996 the p/e ratio of the market hit 20 which was a level that in the past stopped prior bull markets in it's tracks. During this time, optimism was also fairly high as measured by consumer confidence and mutual fund flows into equities was high as well and so it may have been very tempting to make the contrarian case as many market experts at the time did that a bear market was immanent. In 1996 Greenspan came out with his "irrational exuberance speech" indirectly suggesting markets were too frothy. At that time the SPX was about 650. It took another 4 years and about another 130% additional gain in the SPX before the bear market that people expected to come arrived. Sure, things got bubbly but the fact is that the market went where it went and that's all that matters when it comes to the bottom line i.e. whether you made or lost money. At the end of the day it's all about making or losing money.
During the rally since March there have been a countless number of hooks that have kept people from embracing it and I've mentioned them here. It is very, very difficult to ride a bull or bear trend correctly from start to finish because somewhere down the road you tend to get caught on one of these hooks. Famous speculator Jesse Livermore once said that he knew of people who were correctly bearish at the start of a bear market or correctly bullish at the start of bull market but never 1 who stuck along with it to it's end. My lofty goal is to ride this bull trend right to it's very end. This doesn't mean I won't attempt a ST counter trend trade or arrogantly never take a profit along the way but as the saying goes, ride your winners cut your losses short.
And please, please, please, if you had success lately don't get a swell head. The moment this happens you can be assured that an ass whipping is comming your way. I've been on a hot streak with my stock picks lately as many of them have surged almost immediately after I have bought and I've been able to get away with very little or no losses on trades I've been wrong about. No doubt my confidence level is high now and I've been getting urges to make some rather bold and reckless trades but then I find myself saying to myself "hey asshole, you aren't as good as you think, keep a tight game". And let me tell you something....you too aren't as good as you think. You think you are humble enough? I doubt it. Let me repeat this....you aren't as good as you think. If you got stinking rich from the market and have done so by CONSISTENTLY making money for over a stretch of several years in both bull and bear markets (not just 1 year of success which could be just luck), then fine, you probably are pretty good. And when you are on a hot streak, by all means get more aggresive by betting bigger but don't get reckless. Wait for your setups, have your gameplan, ect.
I once heard about a study conducted wherby several hundred people were polled and were asked if they felt they were an above average driver and well over 50% said yes which obviously can't be true. The same results occured when asked to rate their looks. People have a tendency to think more highly of themselves then justified. Look, it's good to be confident in yourself...you need to be in this game. And when you are really down about yourself after going through a bad losing streak, you are probably not as bad as you think either...find that middle ground....the best place to be from a attitude/self worth perspective is cautiously optimistic.
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