Straight from the pages of my own trading journal. These are my charts from all the market corrections since 1981. Here’s why I want to share these with you.
The beauty of technical analysis is that it represents human emotions expressed by the buying and selling behavior of investors – emotions which are predictably repeated in times of crisis and have not changed over time. In the midst of the present correction, I find that looking back at these charts stops me from doing anything rash or stupid.
Dan Ariely, a Professor of Behavioral Economics at Duke University, said this at the Yale Club in 2013. “In the present, we get tempted and misbehave time after time.” He explained how investors are apt to be swayed by short-term temptation without consideration or appreciation for long-term benefits or disadvantages. To fight that temptation, we must make use of self-control, which in turn will limit the influence that temptation has upon us.
I don’t want to list too many of my own conclusions concerning these charts as that would provide a disincentive for you to study all the market tops and bottoms to draw your own conclusions. Those are the personal insights with the most adhesive long-term quality. A lecture from me will be forgotten far quicker than those lessons you learn by digging into the charts yourself and finding lasting observations.