An oil tycoon arrives at the gates of Heaven and hears the disturbing news:

— The Residential Complex reserved for men who work in oil is full!

After managing to get St. Peter to let him say a few words, he shouted:

— They struck oil in Hell!

At which point every oil man went running toward the depths.

Impressed, St. Peter said to him:

— Now there's plenty of room.

The tycoon then paused...

— Yeah, I think I'll go along with the rest of the boys. After all, there just might be some truth to that rumor.

The story above was told by Benjamin Graham to his students and colleagues to describe moments of market euphoria, where a compelling narrative, made up of nothing but words, can lead even intelligent people to fall into traps.

Since I publish my performance in the MAN11 portfolio, I get a lot of messages asking why I don't have this or that asset in the portfolio. 100% of those messages reference whatever is currently fashionable.

In my humble opinion, if it's in fashion — meaning if even your neighbor is asking you about that asset at a barbecue — it is no longer an opportunity.

The more euphoric the markets, the more people discount the risks in their scenarios. We see, even more so nowadays with social media, people bragging about extraordinary profits, and then comes that feeling of missing out on an incredible party (FOMO).

What the vast majority doesn't think about is that nominal profit is different from realized profit. After that person sees their nominal profits melting away, they don't go back to social media to say what happened to their speculative trade.

This happens in day trading too.

We saw this week the fastest rise in the history of our Futures Index. Whoever was positioned long or had a buy order just above the price at that moment made money. Many of them took to social media to feed their own egos and, of course, position themselves as the geniuses of the Market. "It was so obvious..."

Tomorrow they'll give it all back and won't go on social media to explain why they got it wrong.

This is the circus surrounding the Market! Everything is predictable, everything is capable of generating profit with the right technique.

Control yourself!

Euphoria and panic cannot be part of our decisions.

The Market is not a Residential Complex in Heaven full of crowds, but you also don't need to go running to Hell just because everyone else is headed there.

Until next Friday, and to hell with the oil in Hell!

João Homem