Are You a Bull Market Genius?

Recognizing This Fatal Investment Flaw Could Save One's Skin

Aug 5, 2009

As the stock market rallies back from the slump it's been in, many investors will find themselves investing under the influence (IUI) of their own inexplicable success.

According to UrbanDictionary.com, a bull market genius is a person who showed a profit from his or her investments while the market was going up.

As a result of these profits, the person who invested money now believes he or she is a great investor of immense wisdom, and may be a likely candidate to advise others on how to make a fortune as he or she has.

Winners in a Bull Market are Like Average Gamblers in a Casino

For those who love the game blackjack, here is a winning formula. Find a table that is comfortable, place a bet, and get cards that are better than the dealer's. It works every time.

Sarcasm aside, many people visit casinos every year with the idea of having some fun playing the games. Over time, those who visit regularly have wins and losses, and even gain a feel for certain methods or strategies, allowing them to enjoy it all the more, and maybe even obtain a slight edge.

But the truth is that the average gambler keeps casinos in business, and business is good. Those who win, often do so because of luck. When the stock market is combined with the average investor, many wins are the result of luck as well.

In the 1990's many homeowners found themselves becoming wealthier as the value of their homes rose, leaving quite a disparity between the amount owed in mortgage principle and the equity that contributed to their net worth.

Additionally, home owners began to find that interest rates were falling dramatically, creating magical opportunities for them to maintain the same minimum payments while obtaining tens of thousands of dollars or more from the equity in their property.

As these homeowners marveled over their good fortune, and perhaps investment savvy in buying a home, as they sat in their new kitchen, bathroom, or swimming pool, they did not see that they could possibly end up upside down in their mortgages as some have due to leniency in lending practices and falling home values.

Today, those who would like to sell may not be able to since the money that would have been made in the sale was already extracted to re-tile the hallway, replace the roof, and go on a second honeymoon.

Trust Friends With Investment Advice, but Verify

A friend with investment advice is like anyone else with investment advice. While some have an occasional hot tip that comes through, it is important to verify. After all, why lose money on the advice of another when most are perfectly capable of doing it on their own?

When receiving advice from friends, be sure to check their genius at the door and wait for a little bit. After all, good investments today are going to be good investments tomorrow. If tomorrow is going to be too late, it might be something that's best to observe with little or no vested interest.

There is no tried and true formula for determining who is and is not a bull market genius, but someone might be a bull market genius if they:

If a loved one has any of the above afflictions, it might be too late as firm footing is often not obtained until one hits rock bottom. Nevertheless, hope should not be lost because it is only through knowing oneself that self improvement can be sought. It is the same for those who gamble by investing in a hand of blackjack, a home to live in, or a share of stock.

* This article is intended for informational purposes only. Please consult a licensed investment professional.

The copyright of the article Are You a Bull Market Genius? in Shares/Stocks is owned by Christopher Pascale. Permission to republish Are You a Bull Market Genius? in print or online must be granted by the author in writing.