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Jim Rohrbach Offers Insight on Darvas

Feedback in:

Mike:

I am so pleased that you discovered Nicholas Darvis. I bought his book “How I Made 2 Million Dollars in the Stock Market” in the early 1960’s. That’s when I first started developing my RIX Market Timing Index. I loved that book and I lent it to someone or gave it to someone. There were many lessons in that book for a young guy trying to figure out how to invest with the trend. Like, “Never Sell A Rising Stock”. His transactions were documented very well I thought. Stay out of market board rooms. He definitely influenced my thinking about identifying changes in the trend of the stock market. I could not put down the subject and I spent 7 years developing my RIX Index which accurately identifies changes in the trend of the stock market. It has worked for over 40 years and it frequently gets me ranked No. 1 in the country on Timer Digest’s Top Ten Timers List. Yes, Nicholas Darvas is the real deal and I am so glad that you are telling your readers about him. He is definitely one of my [mentors]. I am pleased that you are bringing his work back to life. I hope your readers study what he said in that book!

Your friend,
Jim Rohrbach

Thanks Jim!

Note: People can listen here.

“The Market is Always Right.”

Jim Rohrbach writes:

I was listening to the Gary Kaltbaum show last night, and my friend Brian Balsanek was filling in for Gary. Brian said something that was very profound and simple. He said, “The stock market is always right.” I love that. Yes the market is always right. Often we hear people saying that the market is going to go up or go down. They place their investment decisions with what they think the market is going to do. Then when the market doesn’t do what they think it should do, they try to tell us that the market is wrong. They don’t admit that they are wrong. The market does what it wants to do and it is always right. We may not agree with what the market is doing at any point in time, but it is futile to say the market is wrong or to invest opposite the market. If the trend of the market is up, that is the correct trend and we need to go with it. If the trend is turns down, we should get out and not try to rationalize that the market should not be going down. Since the market is going down, and since the market is always right, we should get out.

Nice Jim.

Jim Rohrbach: Why Investors Buy High and Sell Low

My friend Jim Rohrbach sent me an article he recently authored:

I talk to a lot of people about investing. Many of them are afraid to invest. I don’t think they recognize their fears, but the longer they talk the more I recognize the fears that are not obvious to them. I had a few of those conversations this week. One was from an existing subscriber and one was from  a potential subscriber who has called me on several occasions. At the end on each of the calls from the potential subscriber he tells me that he understands the importance of my service, and that he is going to subscribe. But, he never does. The other conversation is with a current subscriber who did not get in the market even though he knows that the RIX has been on Buy Signals for almost all of the time since the March 9 lows.

What are the common threads in these  conversations? Well the same ideas apply to most investors who can’t pull the trigger on up trends and down trends. When the markets hit their lows in early March, all we heard was that the markets were going much lower and we were going into a depression like the one that happened in the 1930’s. So that creates the fear that “if I get in now the market will go down, so I will wait so I don’t lose money”. It doesn’t matter to these people that the trend of the market turns up. They are afraid of losing money, so they stay on the sidelines.

Another fear happens when the trend of the market starts down. Many investor want to keep their recent profits. They are sure that the markets will go back to their recent highs so they stay too long because they are convinced that “if I sell now the market will turn around and go back up”. So they stay and stay until their losses get so big that they make the decision to ride it out. In bear markets, fortunes are lost waiting for the market to go back up.

Another fear occurs when the market continues up. Those who did not get in are afraid to get in because they are sure that if they get in, the market will turn down and they will lose money. So they wait for a pullback, that may not come. If the big pullback does come, these same people will become afraid again and will not get in even though they are given a second chance. Fear controls their decisions, so they can’t make a move. They eventually join the “Buy and Hold Crowd” and ride out all market up and down moves. They become “Sitting Bulls”.

If investors base their investment decisions on emotions and fears, they will probably be unsuccessful. When investors decide in advance where they think the market, or their investment vehicle, is going to go they will tend to look for indicators to support that decision. They have a strong need to be correct even while their financial world is collapsing.

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