I measure what's going on, and I adapt to it. I try to get my ego out of the way. The market is smarter than I am so I bend.
It's OK to be wrong; it's unforgivable to stay wrong.
Patience is one of the most valuable attributes in investing.
Near the top of the market, investors are extraordinarily optimistic because they've seen mostly higher prices for a year or two. The sell-offs witnessed during that span were usually brief. Even when they were severe, the market bounced back quickly and always rose to loftier levels. At the top, optimism is king, speculation is running wild, stocks carry high price/earnings ratios, and liquidity has evaporated. A small rise in interest rates can easily be the catalyst for triggering a bear market at that point.
To me, the "tape" is the final arbiter of any investment decision. I have a cardinal rule: Never fight the tape!
The idea is to buy when the probability is greatest that the market is going to advance.
Too many people are apt to redeem their profits too quickly. In a huge bull market they wind up with piddling profits, only to watch their former holdings soar. That usually prompts them into making mistakes later when, believing that the market owes them some money, they buy at the wrong time at much higher levels.
One of the frustrating things for people who miss the first rally in a bull market is that they wait for the big correction and it never comes. The market just keeps climbing and climbing. It feeds on itself in frenzied fashion and propels prices considerably higher for six months or so, and sometimes longer.
