With the recent correction in the markets, there are a lot of lazy headlines out there screeming “Midcap Index hits 52-week lows!” First, there is nothing significant about 52-weeks.
Second, if you are worried about 52-weeks, then you shouldn’t be invested in midcaps. Most investors see this:
When they should be seeing this:
.
An excerpt from the book “Thinking in Bets” seems appropriate here:
Our problem is that we’re ticker watchers of our own lives. Happiness (however we individually define it) is not best measured by looking at the ticker, zooming in and magnifying moment-by-moment or day-by-day movements. We would be better off thinking about our happiness as a long-term stock holding. We would do well to view our happiness through a wide-angle lens, striving for a long, sustaining upward trend in our happiness stock.
Now read Pain is proportional to Frequency of Observations that I wrote back in 2016.
Code and other charts are on github.
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