MICHEL PIREU: Know thyself and thy limits to tame dreaded black horsemen
Investors come in a number of guises and knowing which one you are can spare you anguish
One of the more pertinent analogies for today’s markets is George Goodman’s comparison of high-flying markets to "a wonderful ball where the champagne sparkles in every glass and soft laughter falls upon the summer air". "We know at some moment the black horsemen will come shattering through the terrace doors wreaking vengeance and scattering the survivors," Goodman writes in his book The Money Game. "Those who leave early are saved, but the ball is so splendid no one wants to leave while there is still time. So everybody keeps asking — what time is it? But none of the clocks have hands." The problem with leaving the markets too early, of course, is that you end up missing out on more than just champagne and summer air. According to Reuters, in the first five weeks of 2014 investors removed more money from emerging-market funds and exchange-traded funds than they pulled out in the whole of 2013. By then, emerging equity funds had suffered 15 straight weeks of outflows. But, as Joshu...
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