TL;DR
A looming trade war reminds us that market cycles, driven by greed and fear, are inevitable. Retail investors, like John, often get burned.
Story
John, a retired teacher, saw his portfolio shrink by 20% last week. Why? Whispers of a trade war. Sounds familiar, right? Like 2018, or even the 1930s. History doesn’t repeat, but it rhymes.
Here’s the gist: Countries slap tariffs (think import taxes) on each other’s goods. Prices rise, consumers panic, markets wobble.‣ Tariff: A tax on imported goods.
John’s mistake? Trusting the market’s short-term memory. People forget fast. The ‘08 crash, the dot-com bubble—they’re just stories now. But the underlying greed? It’s always there, lurking beneath the surface of every bull market.
So, why aren’t more people shorting the market (betting it’ll go down)?‣ Shorting: Borrowing an asset, selling it high, hoping to buy it back low.
Simple: Fear of missing out. Greed is a powerful drug. When everyone’s making money, no one wants to sit on the sidelines, even when the music is about to stop.
Remember the Dutch tulip mania? People mortgaged their houses for bulbs. Sound crazy? Today, it’s crypto, meme stocks, whatever shiny object catches the speculative eye. It’s all a gamble disguised as an investment.
John’s story isn’t unique. It’s the oldest one on Wall Street: Hope triumphing over experience. Until it doesn’t.
Advice
Diversify, stay informed, and remember: History rhymes. Don’t get caught in the speculative frenzy.