The Rational Contrarian
Another area where I found that I differed from others is investment strategy. When the Asian markets crashed in 1997-98, I lost a lot of money in my 401k. So what did I do? The only thing that seemed logical, I sold all of my non-Asian stocks and went 100% into Asia. After all, I thought, Asian stocks were now “cheap.” Over time, however, I found that many people don’t look at the world that way. They might be momentum traders, assuming something that has crashed will keep crashing, or they might take the Asian crash as a personal affront, and sell their Asian stocks in disgust. Or they might simply lose their appetite for risk. - Scott Sumner, Bentley University Economics Department
