Make no mistake, there is a whole world of “investors” out there, who buy when they feel good, and sell when they feel bad. After all, it is easier to put more cash to work when you’ve been watching your account values rise...and it’s more difficult to do when values are dropping. Think about it, if you always bought when you felt good, and sold when you felt bad, you’d be buying high and selling low. That’s a prescription for failure. There is no due diligence in this process. Simply said, there’s a world of people out there who are currently buying just because the market is going up. How quickly they have forgotten the pain of this past December. They are experiencing what some have begun to call “FOMO”.
The market was quickly and drastically oversold last month, so while nearly all money managers expected a bounce, some have begun to label it a “Bull Trap”.
Here is the link to a video from CNBC that explains this rationale in more detail.
Mike Wilson is the Chief U.S. Equity Strategist at Morgan Stanley. His comments
begin at approximately the 5 minute mark. It is worth the watch.