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Thread: Capitulation!

  1. #1

    Default Capitulation!

    Someone posted this under a blog post recently and I thought I'd copy the comments / response here since it is relevant to the Psychology forum.

    I give up. I am sooo....mortified. I've got to quit listening to doomsdayers and naysayers. I need to just put my money in the 2030 retirement fund and leave it alone. I'm not going to look for "flattops," or "inverted head tests" or hope for a bad "jobs report." I have lost so much money second-guessing myself. I never expected a meltup like this one. It took a month and half to correct and a week and half to get right back up to where it was, while I'm sitting mostly in the G fund waiting to retest the 1249 level with my mouth wide open. I need to find some guts somewhere and just stop looking at charts, graphs, and forecasts.
    My Response:
    I understand how you feel because I have been there many times myself. The alternative is that you will be a buy and holder and when the market goes down, you will be feeling the same or worse, and you'll go through the same emotions.

    Just a week or so ago people were in the Sentiment Survey System Talk forum and talking about giving up on it since it had been in the S fund for the entire pullback. Now it is up about 12% on the year.

    Both are signs of capitulation - "I give up". That's what the market does.

    I'm not a big fan of buy and hold although it is a viable strategy with dollar cost averaging, but it will have its ups and downs. (Of course friends don't let friends buy and hold )

    You can take the emotion out of it, for the most part, by committing to sticking with a system. It doesn't matter what system, as long as it has a good track record, you believe in it, and are willing to stick it out for at least 6 month to a year, or even longer regardingless of short-term results. If you believe in it, don't question the moves. Give it time and see how it goes. Make the transfers when signals are given and forget about everything else.

    Good luck!
    Tom
    Market Commentary | My Blog | TSP Talk Plus | |

    I am not a Registered Investment Advisor. Do your own due diligence.


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  3. #2

    Join Date
    Apr 2005
    Location
    Gainesville, Florida, USA
    Posts
    24,244

    Default Re: Capitulation!

    IMHO all that individual needs is a nice form fitting pair of sticky pants.

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