We work in a field where billions of dollars can change hands in a nanosecond and where opinions on the direction of the market come as fast as the speed of light. With twenty-four hour coverage of the markets and around the clock trading, success is often defined by the day or week. This short-term focus leads investors to prefer securities that have performed well, often regardless of price, even though price is perhaps the single most important criterion in sound investment decision making.
History has shown us that past success and rosy scenarios tend to lead investors to investing at market tops and to avoid investing in market bottoms. It’s human nature to invest when we feel good about the environment and to sell when we feel most miserable.