The Fabulous Market Babe Street Slam 10/02/98
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Another Perspective
There is a phrase that is frequently used to describe the market that makes me crazier than your worst nails on a chalkboard experience.
And that would be...
"The market is telling us _________."
Feel free to use the blank to fill in whatever earthshattering insight currently happens to be the mindset of the day.
So why does this hack me off in a number of unimaginable ways?
For the simple reason that the market itself is not a living, breathing entity that is able to signal, indicate or hint at anything.
Just think about it.
If it did, one would be stating that not only does the market have a mind of its own, but, at any point in time, it is fully capable of psychically transmitting those crystal ball results that any true market junkies would auction off their most valued possessions for.
Which, of course, is complete crap.
Let's just use yesterday as an example.
Here's a common phrase that was reverberated throughout the day.
"The market is telling us we are headed for a recession."
I don't think so.
Here's why.
What the market is currently "telling us", especially on days such as yesterday where there is a rather large amount of pain felt across the board, without the aid of any tangible new catalysts, is the following:
There are a number of individuals that have been put into situations, largely of their own making, such as leveraging their gambling habits beyond reason, and/or exercising poor judgement with regards to their stock positions, that are now being forced to dump these positions for fear of losing everything that they stupidly gambled in the first place.
Translation: it's one's own fault when one didn't take into consideration (or plan for ) "the other scenario"; especially when "the other scenario" involves losing everything or almost everything due to an incorrect bet.
In addition, the market is also "telling us" that these type of problems are leading others to follow, due largely to the mentality of actually believing that at any point in time, the market correctly factors in all available, as well as unavailable (rumored), information.
Which, of course, is why there is even more selling.
In short, the combined forces of a number of individuals being forced to meet seemingly unending margin calls, their subsequent irrational selling, and those that inevitably follow, has gone way beyond whatever happens to involve the company that is being dumped, yet alone the company's underlying strategic positioning, fundamentals, etc.
Which leads me to our next question.
What exactly is the market, if not a living, breathing entity with a mind of its own?
Try a vehicle that is used by a ever varying degree of participants, all of which are segmented toward their style of investing and corresponding disciplines. And don't forget to factor in the underlying emotions that ultimately determine the highs and lows; namely fear and greed.
And while any one group of players may hold court at a certain point in time with their views, it certainly does not imply that they are correct (especially without the aid of their yet-to-be-had crystal ball), yet alone that the market itself is "telling us" something.
So take a deep breath, reassess your goals and do yourself a favor.
Get away from the situation for a bit.
You'll be amazed how quickly your sanity will return. And with it, your ability to assess where the opportunities lie.
As always, enjoy your fabulous weekend!
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