Put These Charts on Your Wall…

Put these charts on your wall for reference the next time you think

  • Something is “oversold” or “at support” and has to go back up…

Valeant Pharmaceuticals International, Inc stock image

  • Something is “overbought” and can’t go higher…

Nasdaq Composite stock image from 1999 to 2000

  • It can’t go to 0…

Image of Lehman Brothers Holdings

  • It is certain to default

Greece 10 year yield image from June 2009 to June 2017

  • Interest rates can’t possibly go any lower…

Image of Switzerland 10 year yield from July 2008 to July 2015

  • Interest rates can’t possibly go any higher…

Image of US 10 year yield from 1971 to 1981

  • Housing prices only go up…

S&P Case-Shiller National Home Price Index from June 2006 to February 2012 image

  • Valuation is a good reason to short something…

Valuation of Amazon price and Amazon Operating PE ratio image

  • You can call a bubble/top without the benefit of hindsight…

Bitcoin prices chart from July 2010 to July 12017

  • Waiting for a correction will surely enable you to buy in at a lower price…

Image of S&P 500 index of 1995

  • Volatility can’t possibly go any higher…

Image of Volatility Index from 2007 to 2008

  • The Fed can prevent the stock market from going down…

Graph of S&P 500 large cap index

  • Value investing is easy…

Image of retuns of Berkshire Hathaway, Inc from June 1998 to March 2000

Comparison between Emerging markets, S&P 500 and High yield bonds

They say a picture is worth a thousand words but in investing it is worth so much more.

Having a few extreme charts on your wall can be a helpful reminder that there is no such thing as “can’t,” “won’t,” or “has to” in markets. The market doesn’t have to do anything, and certainly not what you think it should do. The market doesn’t abide by any hard and fast rules; it does what it wants to do – when it wants to do it.

That’s what makes it so hard and at the same time so interesting. And that’s why listening to the endless prophecies of gurus and pundits can be so dangerous. They don’t know anything more about the future than you or I, which is to say they don’t know anything at all.

Find some charts that speak to you personally, and post them on your wall. Hopefully, they’ll serve as a constant reminder that the range of possible outcomes is much wider than you think. You will need to suspend your disbelief at times to succeed, because the market is forever doing things that it has never done before. There is no impossible in this wonderful game, only more or less probable. Truly understanding that can go a long way toward controlling your emotions and becoming a better investor.


Related Posts:

The Constants

10,0000 Hours or 10 Minutes: What Does It Take to Be a World-Class Investor?

Being Good at Suffering

Fat Tails and Expecting the Unexpected

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This writing is for informational purposes only and does not constitute an offer to sell, a solicitation to buy, or a recommendation regarding any securities transaction, or as an offer to provide advisory or other services by Pension Partners, LLC in any jurisdiction in which such offer, solicitation, purchase or sale would be unlawful under the securities laws of such jurisdiction. The information contained in this writing should not be construed as financial or investment advice on any subject matter. Pension Partners, LLC expressly disclaims all liability in respect to actions taken based on any or all of the information on this writing.



Charlie Bilello is the Director of Research at Pension Partners, LLC, an investment advisor that manages mutual funds and separate accounts. He is the co-author of four award-winning research papers on market anomalies and investing. Mr. Bilello is responsible for strategy development, investment research and communicating the firm’s investment themes and portfolio positioning to clients. Prior to joining Pension Partners, he was the Managing Member of Momentum Global Advisors and previously held positions as a Credit, Equity and Hedge Fund Analyst at billion dollar alternative investment firms.

Mr. Bilello holds a J.D. and M.B.A. in Finance and Accounting from Fordham University and a B.A. in Economics from Binghamton University. He is a Chartered Market Technician (CMT) and a Member of the Market Technicians Association. Mr. Bilello also holds the Certified Public Accountant (CPA) certificate.

You can follow Charlie on twitter here.


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