Investors

investors: About two-and-a-half weeks ago, I issued an important alert to clients identifying what seemed to be arrogance on the part of smaller investors. They seemed to be so overly confident that it was off putting, and immediately, we shorted the Russell 2000. That trade paid off and is paying off, and the catalyst for that decision is part of this discussion. , according to Market Watch. Because we are nowhere near a market bottom at current levels, our discussion here is about the mistakes that smaller investors make when the market turns down from a longer-term top. I have been in this market since the middle of the 1990s, and whether it was the debacle that followed the Internet bubble, the bullish market conditions between 2002 and 2007, or the credit crisis, over all of these cycles one thing has been abundantly clear: When the market makes a longer-term top and then begins to turn, smaller investors play a significant role, and usually make significant mistakes. When smaller investors jumped in with both feet, like they have in recent months, it should be a red flag to everyone else because almost always smaller investors buy at the top and sell at the bottom. (news.financializer.com). As reported in the news.