This Day in History...

On September 9th, 1862, Robert E Lee detaches Stonewall Jackson to capture Harpers Ferry, Virginia, splitting his army to achieve a strategic objective. Though dividing his forces in front of an enemy of superior numbers is a text-book ‘no-no’, it works. And it keeps on working until Jackson is killed at Chancellorsville the following spring. By then Lee believes in the invincibility of his troops, sticking with his seemingly hot hand and sending them headlong into murderous fire at Gettysburg without much thought of maneuver. It is a murderous, history altering mistake, as Lee is defeated and retreats southward. Though the war will last until the spring of 1865, never again will Lee have the tactical initiative or the aura of invincibility.
     
Investors have gotten a lesson in recent days about the hot hand fallacy. Tech stocks in particular have seemed invincible this year, defying economic uncertainty and at times common sense. What else to make of recent stock splits that sent tech shares soaring as new money poured in without any change in the fundamentals of the associated companies? Investors figured they could ride the hot hand for less and learned quickly how volatile the market can still be. Especially as summer ends, the fall begins, and more potentially history-altering decisions are on the horizon.