In this blog I will try to tell you some of my investment philosophy. There has been written many books on the subject, what can I contribute on the matter.
I will start with a quote from one of the investors I respect the most, Warren Buffett. The quote goes like this: “For 240 years, it’s been a terrible mistake to bet against America.”
Here you can see the Dow Jones’ historical performance. A trend follower would have called this a nice positive trend. No wonder the Buffett saying.
How to use this in today’s investment setting? In my book sometimes investing decisions should be based on the subjective odds in the investment situation.
If you talk to a person who often base decisions on odds he would say the chart above tells us there is greater chance for a market rally or a bull market. Perhaps he would have given the rally a 60% chance.
The last year there has been a great post Election market rally. Believing in the greater odds of a rally would have paid off.
So is there a mistake to believe in bear markets. Of course not, if you go into market analysis on a shorter term, sometimes the subjective odds should be greater for a bear market.
To recap. I believe in the market to rally in the long run and one should most often bet on a rising market. I have given you the term subjective odds. It is the individual investor to put odds on the individual market setting.
I just love to quote Buffett, why not try to learn from one of the all time greats.