The Rollercoaster Effect
There are two kinds of investors in this world. One type pays close attention to the daily (and sometimes hourly) flood of information, looking for a reason (any reason) to jump in or out of the markets. The other kind of investor is in for the long haul, and recognizes that the markets are going to experience dips and turns. If these people are particularly wise, they know that the dips and turns are the best friend of the steady, long-term investor, because as you put money into the markets, as you rebalance your portfolio, you gain a little extra return from the occasional opportunities to buy at bargain prices.
Last week, the investment markets made an unusually sharp turn on the roller coaster, and showed us once again the sometimes-comical fallacy of quick trading. See if you can follow the logic of the events that led to last week’s…
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