You notice how investors often like to overstay their welcome?

The people throwing the party give them plenty of opportunities to get out. The music stops playing. The food is already gone. The lights even get turned off.

But some people still choose to stay, almost as if they have no where else to go.

And then they sit around wondering what happened?

“Oh, the DJ going home meant the party was over?”

“What do you mean they’re not ordering any more food?”

“Who turned out the lights?”

These are what we call “Bag Holders”.

They’re an important part of the market cycle, because these are the people who are buying all the shares that the rest of us need to sell, so we can head over down the block to the much better party. The one that’s just getting going.

In life, you need these sorts of people.

We should not make fun. We should not troll. We need to be thankful.

It’s people like this who provide the necessary liquidity for the rest of us to dump our shares on.

We couldn’t be more thrilled to see the Nasdaq selling off. We hope this continues, and in a perfect world it gets much worse.

Here’s a good chart showing the recent bounce in Large-cap growth relative to Value NOT being confirmed when you look down the cap scale. [Read more…]