What you are saying has to be said at the bottom, not at the top. You are a fool to believe your own quaint homily. There is little belief in the downside by the most astute pros. Do you notice that the market starts rallying and it makes you feel good again? Then suddenly, it fails and you get concerned. The selling occurs in two minutes, so everyone is relieved. The bull can go on snorting. All the way down you think this way. During a downside translation there is not one day in which you believe it is going down. You're looking up. The clowns on CNBC are all watching, the public is watching, everyone is watching to see what happens. Suddenly they realize, "oh my god, it's going down"! And they sell. This happens en masse and creates a near term bottom. At the bottom you won't be saying anything and you'll consider what you've said to be just plain stupid.
In order to succeed you must remove yourself from this idiot's game. There are two ways to participate which doesn't make you hostage to the economy, the FED, Wall Street, analysts, or all the other noise makers who constitute the game. You can trade and lose over time or you can invest and ignore all the above and price. Price is only the measure of ignorance. If you make buy/sell decisions only on your estimate of a company's prospects, you'll do as well as can be done. Thus, what the averages are doing is completely abstract and irrelevant to the business of investment. When you have lost 50% of your dough, you won't be thinking down those lines. You'll wish you had sold while regretting the naive view that things will continue along the merry path to wealth.
The market is not guided by macro-economics. Multiples are psychological. Why should any stock have a multiple greater than 1? Expectations that they will improve over time. It's just an expectation. Expectations are high these days. The market, macro-economics, and your investment are disjoint. If your investment is well correlated to the market, then you own a bond-like entity. You might as well get a day job. The economy will get better and better while the market gets worse and worse. How will your quaint view explain that?
You will never know what the underlying currents are. Greenspan doesn't, so how can you expect to? He made a fool error last fall by opening the money floodgates and now you have hell to pay for his fear, his misjudgement that he swore on a stack of bibles he'd never impart. The FED is fine-tuning, fixing the price of money in the free market to the approval of everyone on the planet except one. It is amazing that all the econ text books say you can't fix prices and expect the market to be efficient. That means the market develops larger amplitudinal swings. It's wild in the streets. This is perceived to be better, because then the people feel protected. You pay the protection money and now you are going to get the result. The insurance company is going to welch on you, because that is their job.
You like today's action. You are falling off a cliff and you like the view.
How important does anyone think they are? What does that mean? It doesn't mean anything. It is a way of showing disapproval. You disapprove of the expression of elementary truths. You must think you're important to believe that kind of thinking will succeed, because it is only by fiat of the important that briefly changes what's locked in stone, as you aptly state. The important won't bail you out of this, they're hoping your naivete will bail out their greed. It is likely to happen. |
