June 2018

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Spot the Pattern and Let Me Lie to You

This is actually a post about two different lies.  The first is the lie your brain tells you because it can’t help itself.  The second is a lie investors need to keep an eye out for when presented with market data. Spot the Pattern We all know about the market cycle.  The market goes up.  The market goes down.  There’s a chart that’s basically a sine wave that starts with an upward trend, peaks, reverses, then goes down until it troughs and rebounds to begin the cycle anew.  The market is never that neat, though, right?   Okay, sometimes it is that neat.  This is a beautiful example of the S&P 500 starting in 1997 moving through the cycle.  The first euphoric peak is the tech boom in 2000 followed by the tech crash into despair.  The rebound peaked just before the global financial crisis sent the market back into…