Set forth below is the text of a comment that I recently posted to the discussion thread for one of my columns at the Value Walk site:
Investors overreacted to the banking crisis of 2008? Really?
Another joke of a column.
I wrote a full column explaining WHY I believe that investors overreacted, Sammy. You just engaged in put-downs.
If you don’t think that investors overreacted, why do you think prices moved so hard in the other direction in the following days? Did anything happen in the following days that could not have been anticipated all along as at least a reasonable possibility? I’m not able to point to anything shocking.
I acknowledge that things COULD have turned out much worse. I certainly don’t say that it was a lock that things would go as they did and that investors were thus being entirely irrational in assigning the prices they did. But, yes, I believe that, given the range of realistic possibilities, they overreacted and jumped to hasty and excessively negative conclusions that were then reversed in the following days.
And of course I believe that investors continue to evidence emotion to this day. I intend no personal dig by saying this but I believe that your comment evidences emotion. I think that everyone who writes or advises about investing should be looking for this sort of thing all the time and commenting on it when they see it.
I believe that most of the experts in this field don’t do that because they don’t see it as a good way to turn a buck. If someone tells you that you are reacting emotionally, you are less inclined to like him and thus less inclined to buy from him. But you are also left less able to invest effectively.
We need to know the realities to achieve our financial goals. The experts who flatter us are salesmen, not true experts. A true expert is someone who tells you what you need to hear even when it is not what you want to hear.
And my best and warmest wishes to you and yours regardless of whether we ever come to agree on these investing issue or not.