When I was younger and people would try to talk to me about Skinner and operant conditioning; I would always counter that “humans are not rats”. Rats do not have the option of opting out of the cage and finding food elsewhere. Rats are bred so that there is basically only one type of rat, humans are diverse. Traders, speculators, investors … subtypes of each — quants, value, growth, etc. If the market does not give a profit often enough the trader dies, yet the buy and hold investor (so far) eventually thrives. Yet, for short time periods — the buy and hold investor is often subject to ridicule. It seems to be assumed that a buy and holder is so stupid that they never take profits or cut losses on individual stocks, or build cash (from dividends/stock sales) to take advantage of downturns. Buy and holders in turn scoff at traders, assuming they all day trade until they go broke.

I live in an affluent neighborhood in San Francisco. Ten years ago, when walking around doing errands, I would see perhaps one or two baby carriages, pushed by obvious nannies (Hispanic women-blonde children), now the sidewalk is so filled with carriages that it can be difficult to get around them; and they are being attended to by women who actually appear to be the mothers. Is this happening elsewhere? A new baby boom among the affluent seems to me to be a hugely bullish sign and counter to the “everyone is going to sell their stocks when they retire” meme.

Luck is important in any undertaking. Can luck be counted? Is the VIX becoming unreliable as a fear/greed indicator? Is it possible to have equal but ever increasing amounts of both fear and greed?

I know it is time to start selling a speculative position when I start worrying about the tax consequences of taking profits, although I am usually early.


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