Tag Archives: pavlovs dog

Pavlov’s Dog Capital Markets … Not a Healthy Habit

Capital Markets’ continued fast rebounds are leading to some bad habits.

Do not bite!   – Pardon the pun

Pavlov’s Dog Capital Markets

Just as Pavlov’s dog was trained, capital markets are training many investor’s that any time there is a precipitous drop it is time to buy. It of course works… until it does not!

8-27-15 S&P 500 Two Drop Charts

This is not healthy!

When it doesn’t bounce back, the downside may be even greater as investors trained as Pavlov, may be taking too much risk.

Markets can be vicious money eating animals and this can happen when too many take for granted that “They will always bounce back!”

We do not want fear, but respect for market movements (maybe a little fear) is very necessary.

October of 2014 seems like a distant memory and it looks like September of 2015 may be too. We will not be adding risk based on this assumed bounce back, we are actually monitoring risk even more and adjusting as necessary.

Not being negative, just stating the facts of history!

Have a Great Day!

John A. Kvale CFA, CFP

8222 Douglas Ave # 590
Dallas, TX 75225