Every strategy has its positive and negative aspects. Having the persistence to stick with a proven method and the emotional discipline to resist the market euphoria are by far the most important attributes of savvy and experienced traders. There are not many of them because it is very difficult not to follow the mass. However they are successful in the long run.
All assets pass through fair value periodically on the way to becoming irrationally over or undervalued. Exactly how they accomplish this is complex and not always predictable. If you consistently purchase securities which are extremely unpopular, while selling those that are repeatedly praised in the well-known financial media, then you will come out far ahead of the game in the long run.
Those equity bears who recently turned bullish or commodity analysts who recently became bearish are emotionally surrendering because an especially extended market trend has caused them to become discouraged and abandon their core investing principles.
Investors who own the big winner ETFs of 2013, such as SPY, QQQ and IWM as well as high yield bonds, will keep buying more of them instead of selling. People who own the biggest losers of 2013 will continue to sell them for the most popular reason, tax-loss selling. They should consider accumulating them into pullbacks. Most investors continually lose by refusing to buy low and then sell high.
Being able to stick with your plan in a highly disciplined fashion will enable you to continue to achieve long-term success.
The following article that recently appeared on the MarketWatch website provides interesting food for thought: 2014: Battleground year for stocks vs. commodities