Investment is an art
It is about balance between supply and demand, bullish and bearish, optimistic and pessimistic. Because of such a balance involving us, it is impossible to quantify it. You really don’t know where the turn point is, or rebalance of sentiment. We want to repeat the basic belief, which is market goes much higher or much lower when there is extreme. I ask myself why everybody follows crowd, again, because we’re human, we fell much safe when everybody does it. However, if everybody goes the same direction, then everybody either to sell or buy, this is exactly the turn point. Nevertheless, it is impossible to quantify it; you can’t catch the exact bottom and or exact top.
Human nature drives the market
One of the major market forces is the human nature, such as fear, greed. There won’t anything new in the investment. Booms, bulls, burst have been around for centuries and will continue to the future. Human pushed market much higher when market is bullish, and beat market much lower when market is bearish.
There is always cycle
You can’t have always up market, or bearish market. Whether we are talking about the stock markets, real estate, currencies, even our own lives, things tend to move in cycles. There is small cycle in a given big cycle. Getting into right cycle can provide enormous profit.
History is your best defense
If there are four pillars of investment, or investment theory, history, psychology and investment industry. Understanding of history can help spot the extreme.
Still believe in Asia story
19th century: UK / 20 century: US / 21 century is Asia
Current market is bearish stock market. It is commodity cycle.
Behavior finance is much better market efficient theory