Everybody Is A Financial Genius In A Bull Market

Planning for retirement when paying for private grade school

In a bull market, everybody is a financial genius. Although I sold 75% of my Tesla holding at $888/share, I’m glad I held onto the rest. Otherwise, I’d feel like a real dummy!

Over at one of my favorite blogs, “Get Rich Slowly”, site owner JD writes how he successfully invested more money in the stock market earlier this year.  He wasn’t bragging, he was just stating a fact. JD is very influential, especially given he has 68,000 subscribers!

What’s interesting to note is the commentary that follows his entry.  There are about 125 posts so far on the topic today alone.  Not bad, considering the 75% commentary range is between 60-90.  

After reading every single comment here at home, it surprises me that over 80% of the readers have outperformed the S&P drastically and have made a lot of money.  80% compares favorably to studies which show that only 6% of active fund managers outperformed the S&P 500 over the last five years!

In one of the greatest stock market turmoils in our lifetimes, apparently the majority at GRS didn’t lose much money, didn’t capitulate at the bottom, and made some timely investments earlier this year to ride the rocket ship! Financial genius might be very common.

The questions then become:

1) Are only the readers who made the right investments posting?

2) Should the readers at GRS start a hedge fund and make millions given their financial acumen?

3) Are people stretching the truth and providing asymmetric information by highlighting their wins and hiding their losses?

4) Is everybody really a financial genius?

The truth probably straddles in between all three questions and I would answer: Probably, Probably Not, Most likely, respectively.   People have a false sense of security when it comes to investing.  When individuals make money, there’s a tendency to attribute gains to one’s own financial prowess.  Yet, when individuals lose money in the stock market, the world is generally to blame.

The Economic Recovery

I’m skeptical about this recovery, but am happily enjoying the ride because we all gain when the economy does better.  If some Joe Schmoe feels better about his finances, he might leverage up and buy another car or LCD TV, which will translate into more corporate profits and then more hiring.  Good for him, and good for the rest of us.

With a large reader base, Get Rich Slowly is a great sample set of the American public.  If the majority of them are making good money, there’s no reason not to believe the majority of Americans with internet access haven’t also recouped much of their losses and made good money either.  Still in doubt?  The Gallup poll regularly samples just 1,000 “national adults” to represent the opinions of the entire nation!

The key seems to really be survival.  If one can stay in the game, whether that be in the workforce, or in the stock market, things will eventually snap back in force.  Time and time again, firms tend to over fire and stock markets tend to over correct.  The whiplash effect will never disappear because nobody’s timing is perfect.  US real estate looks to be next on the recovery path, if global real estate markets are any indication.  I’ll touch upon rental property buying come Monday.


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Updated for 2021 and beyond. What a recover it’s been!

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