Skip to content
Trading Game
Trading Game
Trade Confidently and Safely
  • Home
  • About
    • About Louise Bedford
    • About Chris Tate
    • Chris Tate Media Kit
    • Louise Bedford Media Kit
  • Why Choose Us
    • Audited Results
    • In The Press
  • Mentor Program
  • Rave Reviews
    • More Rave Reviews
    • Even More Rave Reviews
    • Extra Rave Reviews
    • Still More Rave Reviews
    • This Is Getting Ridiculous
    • Success Stories
    • More Success Stories
    • We Are Traders
    • A Poem To Inspire You…
    • Hot Off The Press Reviews
    • You Want Proof?
  • Our Network
    • Our Brokers
  • Shop
  • Blog
  • Contact
  • LOGIN
  • Home
  • About
    • About Louise Bedford
    • About Chris Tate
    • Chris Tate Media Kit
    • Louise Bedford Media Kit
  • Why Choose Us
    • Audited Results
    • In The Press
  • Mentor Program
  • Rave Reviews
    • More Rave Reviews
    • Even More Rave Reviews
    • Extra Rave Reviews
    • Still More Rave Reviews
    • This Is Getting Ridiculous
    • Success Stories
    • More Success Stories
    • We Are Traders
    • A Poem To Inspire You…
    • Hot Off The Press Reviews
    • You Want Proof?
  • Our Network
    • Our Brokers
  • Shop
  • Blog
  • Contact
  • LOGIN

Jumping At Shadows

You are here:
  1. Home
  2. Blog
  3. Australian Markets
  4. Jumping At Shadows

I was reviewing the latest Investment Trends data which can be viewed here. There are a few things that jumped out at me but I want to discuss the chart I have posted below.

crash

This chart looks at the current fears investors/traders have about the market. What is interesting about these fears is that as you would expect they are all events that investors cannot control and they are also largely irrelevant. Whilst I understand that fear is a default setting for many particularly within the echo chamber of both social media and mainstream news the fear of an impending crash is an irrelevant one. My view that it is irrelevant is because in part this is a perennial fear for investors that never comes true. In many ways it is akin to having a fear of sharks when you go to the beach.

Ords

These two charts look at what might be termed the equity curve for investing $1.00 in the All Ordinaries Index in 1984 and the underwater equity curve of this investment. A few things are apparent – markets do have periods of collapse although not as often as you would think. The market went almost two decades without a pullback of 20% or more. Indices always recover – note I said the index not that market. Your stocks might be completely stuffed but the index recovers due to its upward bias.Survivor bias can work in your favour of you hold and index ETF.

The number of times that the index has ended with a week on week 20% decline are surprisingly rare as can be seen below.

ords zz

However, this style of data does little to assuage the nervousness of the irrational, even pointing out that simple systems exit the market in the initial stages of the market collapse offer little comfort. The conventional wisdom of the standard market participant is that they go to bed on Wednesday and wake up on Thursday and the market instantly collapses 30% on the open with no warning. This certainly was not my experience of the 1987 crash or the prelude to the GFC. In 1987 the market had actually peaked in September and the market became extremely unstable in the weeks before and had actually given up 10% and then gapped down before the crash. There was ample time and warning, the same is true of the GFC.

I perhaps shouldn’t be too hard on such market participants because the survey also notes that the majority of investors take their advice from market analysts.

 

Categories: Australian Markets, Brokers/Fund Managers, Get Your Shit TogetherBy Chris TateFebruary 26, 20171 Comment

Post navigation

PreviousPrevious post:CEO SalariesNextNext post:Mining Industry

Related Posts

Talking Trading Market Wrap
May 29, 2022
How To Spot Luck
May 11, 2022
Ten Minutes With Tate Are Lithium Stocks A Bust?
May 9, 2022
An Observation
May 8, 2022

1 Comment

  1. Vic says:
    February 27, 2017 at 1:56 pm

    Yes!

Comments are closed.

Trading Game
BACK TO TOP



General Advice Warning

The Trading Game Pty Ltd (ACN: 099 576 253) is an AFSL holder (Licence no: 468163). This information is correct at the time of publishing and may not be reproduced without formal permission. It is of a general nature and does not take into account your objectives, financial situation or needs. Before acting on any of the information you should consider its appropriateness, having regard to your own objectives, financial situation and needs.

Privacy and Licensing | Terms & Conditions | Referrals

  • Home
  • About
  • Why Choose Us
  • Mentor Program
  • Rave Reviews
  • Our Network
  • Blog
  • Shop
  • Contact Us
  • Log In

Copyright © The Trading Game. All Rights Reserved. | website designed by Papdan.com

Social Media: