Improbable Giants Fans.

October 17, 2012

Sometimes life throws curve balls. Today's sure thing ends up tomorrow's "so close I could taste it."
Take the Reds. This time last week they were up two games in the NLDS and needed only to return home and take one of three games. Yes, Cueto was injured. But the team was playing well. And no team had ever come back from a 2-0 deficit in the NLDS. Not one. Certainly the apathetic Giants would not be the first.
Long story short? Last night the Giants opened the National League Championship Series against Reds' rival, The St. Louis Cardinals.
The Reds? They began a long, unexpectedly sudden postseason on Thursday.
In the game of life, one best learn to hit the curve ball. Otherwise, one soon finds himself getting fewer at bats. In many respects, markets parallel life. Expect the unexpected. Manage risk. Set goals. Practice discipline.
Right now, equity markets are following the traditional patterns seen during the fourth year of a first-term president. These typically tend to be good years. And the fourth quarter tends to be the best quarter of all.
Yet, the American Association of Individual Investors reports that bullish investor sentiment, at only 30.6%, has fallen to the spring lows. (AAII Sentiment Survey Here)
Why are investors so downtrodden? Consumer confidence is up. Retail sales are improving. Autos and home sales are improving. Yet, investors remain skeptical.
That, in our opinion, is a positive.
There are hundreds of stock market-related aphorisms that one can toss out in order to appear learned. Yet, the one that I mull over most is that the stock market exists to disappoint the greatest number of people as frequently as possible.
Investing is an emotional process. Greed and fear, the two human traits most prevalent throughout the investment process, are powerful motivators. Rarely for the greater good. Greed and fear contribute to the majority of ill-timed decisions that investors make. Be they a professional trader, or a middle manager investing in her 401(k).
There is nothing new on Wall Street. Everything that happens each and every day has happened in the past. At some point. At some time. Realizing that fact, we can study cyclical patterns, trends and historical precedents. Learn from them. And avoid previous mistakes.
Markets have been positive these last three-and-a-half years. The nightmare that was 2008 appears smaller and smaller in the rear view mirror. So, why do investors remain so cynical?
Perhaps it is the rash of negative news pervading their air waves, monitors and television screens

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