But is it time to panic? Maybe not.
By the way, it's interesting to me how, if you go to Motley Fool UK, you're met with a host of ideas about how to manage your economy. And if you go to Motley Fool US, you're met with a host of ideas about how to buy and sell stocks. I wonder if this is a reflection of any major difference in mentality between the US and Europe? Like for instance that Americans are more interested in making it big and preferably yesterday, whereas Europeans are more interested in staying with the safer and slower options?
All that being as it may, I used to wonder why it was that so many people are investing in the stock market, people who really don't have the money to invest...
Then I realized that it's simply a form of gambling. Which is alien to me (I'm too chicken), so I did not recognize it.
And like gambling, the "mark" always believes he has a better chance than others. He always has a System, or a Hot Tip or something, that makes it a Sure Thing. He is sure he will make 50% a year easy.
But he won't, unless he is as lucky as the next lottery winner. Even the world's most successful investor, Warren Buffet, has only made about 20% over the long range. And he has obviously been both lucky and has used all his time and skill studying the markets. And by the way, he has not generally invested in dark horses, he invested in big solid companies like IBM and AT&T.
After years of study, what I have grudgingly come to acknowledge, on advice from the world's most knowledgeable people is: there is no market where you can know what is going to happen. And if there is, then everybody else knows it too, and the price is already pushed up.
One of my sources for this is the book Fail-safe Investing by Harry Browne (recommended by TTL). And Browne was one of the greatest investors and advisors ever.