Someone please pass the Dramamine. What used to be weekly or daily swings in the market have been replaced by minute to minute changes, driven by all too elastic market sentiment. The market seems to respond instantly to the last earnings report, proclamation for a supposedly in the know talking head, or the always favorite dissection of the minutes from the latest Federal reserve meeting.
I used to wonder why multi-trillion dollar capital markets could be moved by such seemingly insignificant data. Then it occurred to me. There is no “why.” It moves because it does. The “experts” attempt to interpret the movement and in so doing persuade others to behave pursuant to their recommendations. Other experts interpret it precisely the opposite way and persuade their acolytes to behave (and invest) differently. The reality is that we only can know what happens after it does.
But there is an entire industry that would have us believe that the market is knowable and predictable. They can produce all sorts of glossy brochures and other data to prove their point, so long as you don’t look too closely. They want you to believe, no they need you to believe. Their paychecks are dependent on it.
My message to you is simple. If it’s not really knowable, then how dumb can any of us really be? Maybe, just maybe, if we did a little homework, educated ourselves about basic principles and utilized the incredible information that is available at our fingertips, we can be as good (or not) as our experts. You won’t know for sure until you try. One thing is sure, however, you will save the fee for the experts that aren’t.