The word complacency has several definitions or interpretations depending upon the circumstances. Several stories throughout the financial ages have addressed this trading environment. A trader must always be prepared, but when investors are complacent, it increases a trader’s wariness. Two thoughts regarding the environment of complacency come to mind. The first comes from the ‘Great Book’, the Bible. A large farmer has a bountiful crop and builds bigger barns as he boasts of his fortune. He has struck it rich with prosperity or so he thinks. A life of leisure and enjoyment is his future, so he thinks. His mind is tainted with complacency that nothing could be better so he thinks but that night his life ends. ALL that was of this world that he possessed never was enjoyed as he so thought!
The second thought is apathy from a standpoint of unwillingness to see the inevitable, much less plan for it. My career in trading has taught me a paramount lesson, be prepared, be ready, be scared at all times. Fear is an emotion that keeps traders alive and sharp to see with clarity. Maybe apathy isn’t the exact definition of complacency, but it is sure in the same family.
The world of history is a place where the names, places, and times vary but situations all ring true in the unfolding. The term ‘great’ beside an empire has universally spelled doom for that empire. The cycles of the mindset of civilizations are an epiphany for the future generations but somehow complacency seems to be a shroud of seeing just before the actual darkness appears.
Have we learned anything from the crisis of 2008? I guess very, very little as over indulgence is the precursor of complacency. Notice how the housing markets have not recovered but that is relegated to the back pages of the newspaper, while politicians stay clear of these areas of despair and the people who live there. The banks treat bad loans like a permanent scar, but always covered with make-up to make it unapparent.
Our ‘Wall Street’ is no longer the American people’s ‘Wall Street’? It is controlled by insiders privy to the ‘secrets’ of the factors the general public is forbidden to see until it is too late. Yes, I am very concerned about our current stock market, but there is always a way to make money, just find it! Those who succumbed to housing market lure have long ago lost their complacency. Unfortunately, complacency fades after prosperity has long been eradicated. Traders will survive as their credo is just that.
Expect extreme volatility in the second quarter of 2012. Do not be the farmer with his barns full and his life forfeited. Stay lean, mean and aware!