Do you hear that – that annoying market noise? Did you notice it’s getting louder? Bubble this and bubble that. Great value, over valued, bullish, bearish. Everyone’s a technician when the fundamentals can’t seem to explain anything.
Now is the time to turn down the volume, because the noise is getting deafening.
One of the challenges we have as traders is to manage our way through unknown outcomes. When we feel confused or puzzled, we often find comfort in opinions that give us solace or some clarity. Unfortunately, these opinions are dangerous to follow.
Why should we avoid listening to market timing calls? Because their time frame is NOT yours!
Look, not everyone is wrong, and I suppose over time that many diverging opinions might be proven right – but most are not. As we all know, it’s the MARKET that tells the truth.
Below is an updated article about how to deal with the noise and turn down the volume.
So here we are with the markets once again tagging new highs, and the list of prognostications gets longer.
“A correction is coming!”
“Those who are ‘out of the market’ won’t feel any of the pain.”
“I’m hearing that a 5% correction is expected and that it would be healthy.”
Really? As I’ve said many times, it is futile to tell the market what it should do.
Our landscape is littered with gurus, experts and pundits giving really bad advice. CNBC recently started trotting out statistics, because, well, what else are they going to talk about? Meanwhile, party hats are being ordered for new market highs.
The market will tell you what to do. That being said, why even bother waiting for a correction? If I am long on bullish names, as I have been, I love uptrend days to unload stuff. Late last week was a perfect example. I took advantage of good demand and higher prices in order to book winners and take losers off my board.
I’m also hearing some doubts about the economy, and of course we are seeing some rather weak economic data. This may portend some headwinds down the road (namely, early 2014), but the data predicted this market six or eight months ago. At this point, the market is not seeing any reason to be cautious.
Recently, I heard some guy comparing this market to 1999, complete with a horrible ending, all because of scary heights. Funny, I was trading in 1999, and it was one of the best years ever for the markets and technicals. Absurd price levels? You bet, and if you were short that year, you got hung out to dry. If anything, the second half of 2000 was the period to be worried about because it predicted a miserable 2001-2002. The bear market was in plain view – if you looked at the technicals.
And then there is the bond market, quantitative easing, and the Fed. If I had a dollar for every prediction about the process and the outcome, I would have millions. Where and when do you get in the markets? Fed policy has made equity markets a fertile playing ground for a few years, and finally, at all-time highs, people are coming around to it? This is when we see the latecomers arrive at the party – at a time when I’m exiting, if only to keep the gains I have accumulated. I won’t worry about missing out on further gains.
I am in opportunistic mode here, booking gains where I have them and picking off ideas that have potential as I read the charts and technicals. I have been making far more bullish plays, because the trend is in place for the markets to rise higher. But overall, I’m not bullish or bearish. If you’re sitting on the sidelines and decide to get involved at this late stage, you will face challenges.
Pay attention to what the markets are telling you, turn off the noise, and you’ll be in a much better place as a trader.
