After a big move up, it always baffles me that people want to join the ride.
The main premise behind this action is the idea that the market is now signaling that it is safe to get back in, and the adage the trend is your friend. This is momentum investing at its best.
But if you flip it on its head, you end up with the disastrous situation we had last year. Investors selling the market late and eventually quitting at the bottom.
What is interesting to me is not only that momentum investing fits a certain psychological disposition, just as contrarian investing fits a certain psychological profile, but that you can make good money on both sides of the divide.
My guess is that really good investors manage to mix the two perspectives within a fairly flexible investment framework.
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