26 SEP 2009, Saturday

1. Wow!!! Recently stumbled across this picture and it captures everything about trading and investing...PERFECTLY! The Master Surfer riding the waves?
2. You should be fearful when others are greedy and greedy when others are fearful. It goes counter to normal human emotions because we are social animals. We like to be doing what everyone else is doing or finds acceptable. In other words, we find comfort in being part of the herd which is OK in the middle of moves but not at the turning points.
3. It also explains the "news". Huh? Remember that the market moves and the news follows? Well, don't you think "Da Boyz" leak news when they need to? Sure they do...they play the masses like cheap emotionally driven fiddles! For example, their analysts pound out "Buy" towards the tops (they are selling what you are buying) and then put out their "Downgrades" towards the bottoms (they are buying what you are selling)? Don't trust those lying bastards...they are the wealthiest CON MEN in the history of the world. Think Hank Paulson and his "We are for a strong dollar" or Ben Bernanke's "The economy is fundamentally sound and the sub-prime mortgage issue is contained" commentary. Yeah, right!
4. Instead, think for yourself!!! Huh? What? I've got to work for the money I hope to make? Sheesh...where's the fun in that?
5. Another old saw on Wall Street is that "Bull markets go up on bad news and Bear markets go down on good news" (news lags the market). It is counter-intuitive and it's why it works! So alerts are quietly put out by the market by it's reactions to news items: 1) Market up on what would normally be bad news = enough buying to overcome it and 2) Market down on what would normally be good news = enough selling to overcome it.
6. Simply put, "Da Boyz" prey upon normal human emotions and the thing we get most emotional about is our security. Afterall, all money represents to our primitive lizard wired brains is security: 1) when we have it we can have food, shelter and fun whenever we want (Cool!) and 2) when we don't have it (Oh shit!) we do anything and everything just to ensure our survival and try to get it back.
7. Now for just a simple example of the news: The Federal Reserve’s statement after this weeks FOMC meeting was even more positive about the economic recovery than its previous statements (and by the way stocks shot upward initially and 30 minutes later rolled over and dropped 2%...down on "good news"?). The Fed said “Conditions in financial markets have improved further, and activity in the housing sector has increased. Household spending seems to be stabilizing.” However (but...there's always a but), the statement also included enough cautionary phrases to keep analysts guessing as to just how optimistic the Fed really is, as the statement also said that household spending “remains constrained by ongoing job losses, sluggish income growth, lower housing wealth, and tight credit. Businesses are still cutting back on investment and staffing.”
8. Soooo....which is it Mr. Bernanke??? The news headlines were Fed sees conditions have improved! Woohooo!!! But screw what they say because...
9. What they DID, as was expected, was that they left the Fed Funds Rate at the extreme low range of 0 to .25%, and said “economic conditions are likely to warrant exceptionally low levels of the federal funds rate for an extended period.”
10. Soooo...what they said makes the headline news but what they did speaks volumes. Are you listening to the big picture or just the sound bites? Think up!
11. So use the "Cycle of Market Emotions" picture at the top and think "Where am I now?"