Topic: How To Invest

What is Pat’s commentary for the week of June 8, 2021

Article Excerpt

I’ve often written and spoken about the poor reliability of using market indicators to guide your investment decisions. Recently I’ve said this reliability is likely to be even worse now, if only due to unsettling developments such as the pandemic, the unprecedented plunge in interest rates, and fears about U.S.-China head-butting. Recently an investor asked, “If we don’t use market indicators, how are we supposed to decide what and when to buy?” That’s a big question. I told him about our concept of “financial physics,” and how we use it to aid investing. By financial physics, we mean paying attention to human nature and the way people respond to financial incentives. As one example, financial physics has worked out well for us in formulating our advice on new stock issues, otherwise known as Initial Public Offerings, or IPOs. As we’ve often pointed out, IPOs tend to come to market when it’s a good time for the company or its insiders to sell. That may…

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