Dan Frishberg On Escaping the Herd Part 1

Daniel Frishberg On Escaping the Herd Part 1

Thousands Now Make Good, Reasoned Decisions, Just Like the Most Successful Billionaire Investors:

Many thought they never could, until they trained themselves to stay awake and escape from the herd.

By Dan Frishberg PART 1

It is not easy to maintain an investment posture based on three to six month forecasts, when the daily movements are large, and emotions around you run high.

Some observations:

I’ve been concerned that the U.S. may be in the process of losing so much of the world’s confidence, that in moments of stress, investors around the world would sell dollars. That would be a major sea change, and would indicate to me that the damage done by what I consider foolish economic policy was profound and could be difficult or impossible to reverse.

The policy of continuing to print money in order to continue living on borrowed money is a bad idea, but when the level of panic rises in the world, I am happy, as an American, to report that the world still considers the U.S. dollar to be THE safe house. That is good, though it doesn’t suggest to me that complacence will help you or me make the right decisions.

My emails tell me many investors are experiencing a flashback to September of 2008, when they awoke to the crisis in which the survival of the world banking system and the willingness of people around the world to trust counterparties were in question.

The Americanization of the world is not being seriously threatened - at least not yet. U.S. growth is accelerating and will be better three months from today that it is today. The banking system and principals around the world being able to continue with enough trust to do business with each other is not in question today, as it was in 2008. The news reports selling as being caused by whatever event is currently being reported. This is almost always incorrect, but it does allow the reporters to justify their claim that you should spend a lot of your time following their reportage.

For weeks we’ve reported that our indicators have been suggesting short term weakening in demand and temporary willingness of investors to take profits after an unusually strong and persistent rally.

These pullbacks from time to time are inevitable and do not mean a major change in direction for the stock market. At the moment of impact, it is admittedly difficult for the average investor to distinguish between a correction in an ongoing bull market and a catastrophic collapse.

Here is a clue that could help, though. The investments that are likely to make you the most money over the next year or more are the ones being sold most aggressively. A real economic change would mean the world sells those investments it believes will make the least money in the future. A desire to raise cash in a hurry means investors sell their most profitable holdings, where their profits are being stored.

Any selling has to worry anyone who is still breathing, but doesn’t call for abandonment of a coherent strategy. It does point out that anyone with too much exposure to risk, may want to wait for a calmer moment, and make portfolio adjustments accordingly.

Stay Tuned For Part 2 Coming Soon!- Daniel Frishberg  "The MoneyMan Report"