The "Fed" Train
"An express train coming at me sixty miles and hour."
Today’s lesson comes from the great Jesse Livermore.
“Get Off the Track”
Never fight the fed. We hear it all the time…now. And this lesson may not have been apparent to all of us before, but in hindsight, it’s now a good lesson for us to learn.
Jesse Livermore says:
"If I were walking along a railroad track and saw an express train coming at me sixty miles and hour, I would be a damned fool not to get off the track and let the train go by. After it had passed, I could always get back on the track again, if I desired. I have always remembered that as a graphic bit of speculative wisdom."
Nowhere has this quote been more applicable than in today’s situation. Not all of us knew how the Federal Reserve worked. And even with all the meme’s about money printer go brrrrr, we still may not have known just how much power and influence the Fed had over the stock market.
Some of us got off the track, and some of us got run over by the train.
The important takeaway here is to brush off, and move on. Learn the lesson here.
There are events in life that will be devastating for the markets. They are unpredictable, and it’s up to us to react quickly and get out of the way.
COVID was a massive event, and the market dropped quickly. Had the Fed not intervened, it may not have fully recovered yet.
September 11 was a big event that tanked an already weak market and was followed by another two years of market weakness.
Sometimes, it’s best to take the loss, get out of the way, and understand that it’s much less painful to get back in late than to get out late.
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