Selling at All-Time Highs Is Now Considered Contrarian!

be-fearful-when-others-are-greedy-and-greedy-when-others-are-fearful

As I peruse through many of the early FI blogs across the blogosphere, I am somewhat struck to see the number of sell orders that have started to pop up. In years past, most everyone was aggressively hitting the “BUY MOAR!” button, enjoying this wonderful bull market that first took flight in 2009.

Well, as fun as the ride has been, in life, as we all know, “All good things must come to an end…

Bummer.

I’m sorry aging old bull market buddy, but you are now operating in your twilight days and most everyone out there is starting to come around and make the same realization…

But what surprises me (somewhat) is that when I’m reading through the comments section of many of these blogs, people are saying ridiculous things such as the following:

 

  • “You’re making the biggest mistake of your life!”
  • “You’ll regret this decision, I’m sure of it!”
  • “Bold, bold, bold move!”
  • “You’re getting way too emotional and overreacting!”
  • Etc…

 

WTF, mate!?!

I’ve got to admit, reading those type of comments can’t help but make me chuckle…

 

Are people seriously delusional, or what?

 

Anyone selling general equities, bonds, and real estate today is exiting off the stage and booking profits at record high prices and valuations!!!

If anything, these sellers should be commended for a job well done! Wow, you were able to “buy low and sell high!

 

  • Fuckin’ A!
  • What a g!
  • You’re a stud!

 

Well, those are the type of comments that I hear in my head when I’m first reading through many of these posts…

 

Anyway, you know we live in a crazy world when selling assets at market tops makes you a black sheep and contrarian…

 

Just look around you and try and make sense of the world we currently live in right now:

  • Zero Interest Rate Policy (ZIRP) going on for a good decade…
  • Negative Interest Rate Policy (NIRP) spreading like the plague worldwide…
  • Investors buying bonds for appreciation and purchasing stocks for income (that’s so ass backwards! Seriously, spend even just ONE minute thinking this through…).
  • S&P 500, Dow Jones, Nasdaq, all hitting record highs!
  • Prime real estate across the globe in super-bubble territory!
  • Bonds trading in super-duper-bubble territory!

 

All this while global economic growth has grinded to a halt… Wages are down, earnings are declining, and Main Street is suffering mightily while Wall Street keeps prospering more and and more and more…

 

This will not end well… It never does…

 

When it comes to investing, you will fail NOT because of:

  • Lack of motivation.
  • Lack of passion.
  • Inconsistency.
  • Inability to save aggressively.
  • Boredom.

 

No, you will fail because of:

  • Being too motivated.
  • Having too much passion.
  • Investing like clockwork (rain or shine… even too much shine!).
  • Investing way too aggressively.
  • Far too much interest.

 

Over the years, I’ve observed the thoughts/actions of many, many, many investors (including myself)… What I have found is this — Investing is a drug… No scratch that… Investing is the ultimate drug!

The lust for greed will damage you far greater than any drug ever could…

When people start making money (even just morsels), they don’t ever want to fuckin stop… Their brains buy into the belief facade that incremental progress is somehow the path to financial freedom… These investors forget that markets behave like sine waves (over the long-term), and go both up AND down.

Nope, when you’re on drugs, you start believing in some crazy ass shit…

  • Straight-line perpetual growth!
  • Buying aggressively at market highs is the prudent thing to do!
  • Selling at market tops is BOLD AND RECKLESS!
  • Risk vs. Reward… Who needs to worry about that crap? The only risk is in NOT buying and siting on the sidelines like a loser!
  • I’m not only indestructible but an investing genius!!!

 

At market tops, fear is considered contrarian while greed permeates and is the default action of most investors.

 

At market bottoms, greed is considered contrarian while fear permeates and is the default action of most investors.

 

Think about it…

 

Anyway, at this point I know that I sound like a broken record, so I’ll just leave you with the following comment that I’ve been plastering across the web this past week (I network with lots of investors).

 

It is 10x more difficult to buy at market bottoms for experienced investors and at least 1000x more difficult for new investors. What this means is that the opportunities that present themselves during the Depths of Despair are truly “life changing”. You can make $1 million+ in ONE cycle! If you have to look for “needle in the haystack” type of deals, it’s just not worth doing… Too much work for too little reward. Patience and doing NOTHING is what trips up most investors b/c if you’re too active, at market bottoms even if you want to buy, you have no cash!

 

Well, I know that I have no street cred, but Warren Buffett sure does:

“Be fearful when others are greedy, be greedy when others are fearful.”

 

Everyone knows it… How many investors actually practice it?

 

Fight On!

 

Photo Credit: Kapialust.com

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Investment HuntingFI FighterDividend HustlerTawcanbeth Recent comment authors
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Midwestern Landlord
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Midwestern Landlord

Very true and excellent points. I wish I had more of this knowledge when I was young and reckless in the market. I learned the hard way.

I would guess that there are a lot of dividend investors or 401K investors that look at what you are doing as reckless. IE timing the market, heavily invested in select industries, stock investing, buying low cap stocks, etc. The funny thing is, you can’t argue with results. When someone is up over 100%, you just can’t try and call them out because you believe it is reckless. How well would you be doing if you took the advice of never having more than 10% of your portfolio in any one industry sector, IE precious metals? OK maybe but not nearly as well as going with your conviction and recent results. Yes there is some risk to this strategy but you were comfortable with the risk / reward curve and it has worked out well to date.

Said all that, even though we all agree that we are in the late stages of a bull market, it clearly does not apply to all investments. For instance, you recently stated that precious metals are probably in the 3rd inning. That does not sound like bubble territory even though the overall market is probably in one. Sound real estate in my area has not increased in value much in the past several years. There is an abundance of quality deals in my area with great long term interest rates that one can obtain. Same prices (or similar) to 2009, 2010, 2011, 2012. No bubble here. So one absolutely has to look at what their wealth is concentrated in. If it is in a bubble area, probably a good idea to sell or diversify.

Roadmap2Retire
Guest

Fantastic post, Jay.
Buy low sell high is the most basic principal when it comes to business and investing but it is a sign of the crazy times when you are considered a contrarian for selling at all time highs. It’s truly mad out there.

Some excellent points made. Most people know these principles in theory or repeat the quotes over and over but almost never practices it. It’s what makes most investors lose their money in the market and acting on those emotions at market depths. When markets have crashed, cash provides the ultimate freedom to do whatever you want — what’s the worst that will happen? You may miss on an opportunity and you will have to live with it. I will take that any day.

I don’t know where the market will be next week, month or year — but I know that I have a lot of options available holding cash now.

R2R

JC
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JC

I sold my entire portfolio last month and started buying up shares of lithium… after discovering this site. At first I had some mixed feelings as many people around me, including my financial adviser, looked at me with a half smirk almost saying, “you’re making a mistake” when I told them. I’m glad I booked the profits. Late to the party but I also added some gold and silver into the mix. Hopefully this all works out.

beth
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beth

The ex-dividend date for several of my long term hold stocks is September 28 and I have been thinking very hard about selling on September 29. They have all gone up in price and I could take a small profit.

The things I am considering selling are all great companies that I will be watching for some sort of pull back so I can buy even more shares and get the dividends flowing again.

I have some cash ready to buy now and I can add to it but things are just priced too high right now and I need a stock sale to put my money to work.

Tawcan
Guest

Great post Jay, certainly gets me thinking a bit. 🙂

Dividend Hustler
Guest

Thanks for the post Jay.
I wish I had followed you in buying all the Gold stocks and precious metals. I shoulda listened to my wife When gold was at the absolute bottom. Being very loyal personally, it has cost me a lot of money sticking with “only” dividend growth investing.
Now, I’m gonna try to have a more open mind. Thank you for being contrarian and glad I’ve met you. Cheers bro.

Investment Hunting
Guest

Whenever I sell a stock , I get comments like the ones you referenced in this article. Even though I’ve sold, I’m still here. No regrets. I’m making more money selling options on the freed up cash from selling my stocks.

And I’m buying the sames stocks I sold as they drop. Today, I bought 100 shares of TGT for $7.70 less than I sold it for 2-months ago.

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