We are deep into a Bear Market. Absolutely no one will deny that! The Corona Virus fear and possible oil-price war have stock prices dropping fast, resulting in a decisive downward spiral and Bear Market. Everything seems to be shutting down, the economy is slowing to a crawl and unemployment will probably be the outcome of it all. In our Blog last week, we discussed how animal spirits are still alive and living in the Stock Market. So, let’s take a look at what behaviors we are seeing in the Bear Market today.
Last week we looked at the fearful, scared and undecisive behavior of the chicken and the squirrel. Well, right now it seems that we have all types of animal behaviors visible in the marketplace. How about the rooster? You know, he’s always out there crowing about something, good or bad. His investment strategy may have tanked just like everyone else, but he is still willing to tell anyone who will listen what they should be doing. Brings to mind a saying “a rooster one day and a feather duster the next”.
Well, maybe Lemmings or sheep might be easily led by such a behavior, as they are commonly known for following the leader. Whether the leader is crying “buy” or “sell”, they are all in without taking much time to really think about or understand what is going on. A great example of the result of such behavior is the dotcom bubble that grew in the late 1990’s and 2000. It grew from fad-based investing and the absence of caution. Of course, as bubbles do, it burst.
We can see how easy it is to compare animal behavior to human behavior in money matters. With the market in its precarious position right now, maybe an investor would react more like an ostrich, which sticks its head in the sand to be ignorant of everything happening. Now the ostrich may totally ignore all this negativity, but a rabbit would definitely “freeze”. With similar behavior to our previously mentioned squirrel, they just don’t know what to do.
What animal would you consider to be the best type of investor? How about the notoriously wise Owl? It can turn its head in all directions and would be able to see the recovery from previous so-called “disasters” in spite of all the rhetoric to doom and gloom. Maybe the best type might be the tortoise or the ant? How about a combination of all three, the owl, the tortoise and the ant? Slow and steady, industrious, enlightened, educated and organized! A good investor!
One thought in closing, let’s bring to mind the uplifting feeling of the first Robin in Spring and the hopefulness to rise above adversities. That would be a wonderful behavior to exhibit.
Have a great weekend!