Don’t Argue With the Market - But don’t Ignore History Either
March 20, 2008 3:02 AM
I mentioned last night that I viewed the huge rally with skepticism as “the bottom”. This is for two reasons. One, history strongly suggests otherwise. Secondly, reality also strongly suggests otherwise. I am not a big “fundamentals” guy as I let the market do the talking…but I simply see no reason to believe that anything has changed.
Housing is going lower as I have stated for two years, our deficit is alarming, our trade deficit is plunging the dollar…etc. etc. Nothing has changed regardless of the hype. The dollar may have hit a near term bottom because of rate cuts can only go to zero. But reality may eventually come into play again.
I generally ignore the so called fundamentals as you will be broke long before you are eventually proven correct in the markets. Stupidity can last for years and outlast your money by a big margin.
I have also stated on many occasions that this stock market is far, far different than the past. The strength has been driven by inflation where in the past inflation crushes the market. Oil, corn, gold, etc. have been the only real strength and have supported the markets for the past year. This has never happened before. That is another reason that I have worried about a market implosion. It simply seems like a “paper tiger” without any substance behind it.
With that said, trade the tape, listen to what the markets say….but at the same time, remember that history and fundamentals suggest the hype is dead wrong.
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