When you sit down and take a good look at your stock portfolio and you notice that values are accelerating in a way that looks like it’s going vertical, and while sitting there you notice that the marketplace appears to be somewhat complacent, maybe you need to take another look at your stocks. The problem is that when you mix price acceleration with vertical performance and complacency, the market has the tendency to change its mind. One of the unwritten rules that I adhere to is that the market likes to punish the most investors that it can. That is why sell-offs are so fast and unpredictable. Greed has set in and the market is simply lying in wait for just the right time when no one is paying attention. And then all of the sudden, the trap door opens and before you know it, you are down 5, 10, 15%, even before you know what to do. The opposite is also true. It’s as if you just convinced yourself that the selling will never stop, and the market realizes this and turns up when your confidence hits absolute zero!! In my opinion, we are near the point that greed has set in and people are afraid of missing out. That means the formula for the market to punish is nearly set.
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