The Markets Do Not Follow Rational Thought
We have often remarked that investors should not follow the pundits. Investors should not follow the doomsayers. Investors should not follow the day to day fears or euphoria of the markets.
Pundits and newspapers are all people with advertising space to sell, or people with a particular bent to them, or people trying to establish some position or other.
In the last while, over the summer doldrums, the market has drifted with more down days days than up days. I remind readers that this is normal. Most years see the markets stall after May (hence ‘Sell in May and Go Away’). We should also remember that September is normally the worst month of the year, and the third week of September is the worst week of the year historically for the stock market.
So far in September, the markets have been relatively stable.
Of course, we all remember the Black days of October, when historically there have been a number of market crashes in early October, so that test is still to come.
The Markets are Weird
Yesterday’s example is Italy’s benchmark FTSE MIB index rallying after the country got downgraded by S&P, a move which initially sent all global markets lower, then higher.
Not only is Italy in the green, but US futures have come back (after being sharply lower), as has the euro.
So is the downgrading of Italy based on their enormous debt a good thing? Of course not. Yet the markets are reacting positively.
Don’t be misled by news report headlines. Look at long term trends, and buy value.
Is Gold a Dangerous Place to be Now?
Yesterday we published a blog describing why only gamblers should buy gold gold at these levels. There could be enormous profits made, or enormous losses incurred. It all depends on events beyond anyone’s control.
Today we noticed a rash of articles with a similar viewpoint. As a sample, we quote ‘David Alton Clark’ of ‘Seeking Alpha’ who wrote the following – “It is time to take profits in gold and reduce your exposure to the Gold ETF (GLD)”
Buy Value Rather Than Hysteria
Traders in the stock market are just that – Traders. They are equally happy if the market moves up or moves down. So long as the market ‘moves’, they are trading and either making or losing money.
Following temporary movements in the market based on TV shows, newspaper articles, and the like, is falling prey to those traders.
We repeat what we have said so often – buy value and hold it until it is apparent that the value has been achieved, or the effort doomed. Then move on.
The views expressed in this blog are opinions only and are not investment advice. Persons investing should seek the advice of a licensed professional to guide them and should not rely on the opinions expressed herein. This blog is not a solicitation for investment and we do not accept unsolicited investment funds.
