Maniac Investment

Let's first understand what maniac
means . According to Webster a maniac is " mad ;
raging with madness ; raging with disordered
intellect ' . You do not need someone like that know
You?

There is a book that is still in
print today that was originally published in
1841 titled Extraordinary and Popular
Delusions of Crowds by Charles Mackay . he
explains rather gruesome detail how people
were caught in the frenzy of buying real estate
in the South Seas in 1720 , the numismatic coin
craze of 1980 and the tulip trade in
1637. You wonder how people can be so
gullible to have bought a single tulip bulb or
country that she would never see enormous quantities
money . Could something like this ever happen
again?

I was floor trader on the commodities market
exchange in 1973 , when the Hunt brothers drove
silver of $ 2.00 per ounce to $ 54 . that mania
lasted a few months and quickly tanked to $ 6.00 .
I took part in the mania . I was one of the
maniacs .

When it was made ​​it seemed
like the thing to do and very little questioning the
mental health of the participants . In fact, if you
were not part of the crowd there was something
wrong with you. In a stampede is
best to run with the herd or be trampled to
death . However, there were a few people who were not
mesmerized .

Today we take part in one of
manias that only now it is a bubble and
still not taken too seriously . Yes, it
the stock market mania . Many are still
caught in the madness of the crowd
1990's who believe that the "market is always
return . " They are clutching their tulip bulbs ,
Sorry , shares , and refuses to let go
of them , because they know that their value will grow
back to what it was three years ago . Stock owners
have become crazy with what - greed ? fear? denial ?

If anything, almost anything ,
down 50 % in price it will take a 100% increase
in value back to " even " . With the present
and economic conditions in the world that can
long time and maybe not in our lifetime .

Years ago I heard a story about how
they used to catch monkeys. A small hole just
big enough for the monkey to his empty hand sliding
inside would be drilled in a coconut candy and
and vegetables would be put into it . The coconut was
tied to a pole in the ground. When the monkey
grabbed a handful of goodies he did not let go
even when the hunter came to him. greed keeps
him in an invisible grip .

Many investors today are as
monkeys. They refuse to sell what is left
of stocks and mutual funds they hold even
although they can clearly see the big trend
goes down . She was mad with greed and
Now fear of losing catches them .

Until this madness is recognized
investors will continue to see their portfolios
getting smaller . They need to learn
let go .

Written 10/03/03 but today still apply .