Why is the Market Looking to Humiliate You?

Transcript

Ken Fisher:

You know, I think it was about 35 years ago, maybe a little longer, that I first started writing that the stock market is best thought of as the "Great Humiliator". Sometimes I refer to that as "TGH". And when you first encounter that from me, it's often a little ... people wonder, wha? The Great Humiliator, what are you talking about?

And the answer to why I consider it The Great Humiliator is that the way most people think about the marketplace—and what I mean, the marketplace, I'm talking about capital markets. And when I'm talking about capital markets, I'm talking about things that have financial instruments that you can buy and sell— so, that includes stocks and bonds and futures and commodities and currencies, all that. When you think about them, the way most people wrongly think about them is like there should be some linearity between if you're smarter, you'll do it better, and if you're less smart, not smart at all, you'll do it worse. And really, it's more about wisdom than smarts, not that smarts hurt you. But the fact is, there's been a lot of really, really, really smart investors who are terrible at it. Because it's not being smarter than the next fellow. it's understanding that the market actually has almost everything that you can analyze—not necessarily everything, but almost everything—already into its prices.

And so therefore, all of the things that tend to get you worked up usually, for good or for bad, usually have already been fully priced, and therefore, (shrug). So, when you hear about markets and, you know, like, I write columns all over the world, as I think you probably know, and some of those columns have comment sections where people can chime in with their opinions. And when people do that, you can hear them often giving you their view of what I'd been talking about or my views about what I've been talking about. And they're often predicating those on them thinking they're smarter and they know better based on all the same stuff you could read about in the newspapers, magazine, seen on TV, etcetera, etcetera—and if you do, the market will get you regularly. Sometimes you'll be right and/or lucky, but more often, you'll be wrong and/or unlucky, but really wrong.

Finance theory has been really clear on this for a really, really long time: To actually make money consistently on trades, you're supposed to somehow, someway know something other people don't know, which is not easy to do and is also not about being smart. It's not about being smarter than the next guy. It's not, "my opinion, it's better than your opinion," it's not, "I'm the great one." In fact, the more you think I'm the great one, the more the market's set up to show you that you're not— AKA, "The Great Humiliator." The line that I use often is that it wants to humiliate you. It wants to humiliate your spouse. It would rather get your mother-in-law even more. It would even more like to get me, because I'm more public and I'm involved with more money. So, it's, if you will, more fun.

I think of The Great Humiliator as I think of the market— as a near living, near spiritual entity whose goal is to take all those who want to try to make decisions based on commonly known stuff and show them that they're engaged in a fool's errand. Once you get that—once you get that so many of the common things that you hear people say— market's got to go up or down because of this, whatever that is, that everybody already knows about, and then people just disagree about— The Great Humiliator is just waiting to take their legs out from under them, and thereby humiliate them.

So, thank you for listening to me. I think the more you think about the market as a great humiliator, The Great Humiliator, and your goal is to engage it without ending up being humiliated by it— which implies on your part that you need to start with a fair amount of humility, as opposed to I know best I'm smarter than everybody else, and I think that this thing we all read about in the newspaper causes that—the better off you are. Thank you for listening to me and I hope you do well with The Great Humiliator, and I hope you listen to more videos that I put out in the future. I appreciate your interest. Hi, this is Ken Fisher. Subscribe to the Fisher Investment YouTube channel. If you like what you've seen. Click the bell to be notified as soon as we publish new videos.