Doug Kass Bottom

For those of you who aren’t familiar with Doug Kass and his “bottom call” don’t worry, you aren’t missing that much in terms of  usable, trading information. Don’t get me wrong, he is one of the 40 people that I follow on Twitter and I do so for the sole purpose as a gauge of popular sentiment. My problem with how he structures his market calls is that it’s usually in the form of an attention getting headline designed to wow the masses. Anybody can throw out terms like bottoms/tops and sooner or later you’re going to nail a prediction.

Kass predicts stocks will rise 10%-12% by year’s end on the back of strong earnings and a better-than-expected economic recovery. He says positive trends in the ISM manufacturing and non-manufacturing index and improved labor market conditions point to “moderate domestic economic expansion, not a double dip.”

~Yahoo Finance.

He also has gone out on a limb and proclaims that stocks have seen the lows of the year. Now last week could just have been a bottom for this year, but there is absolutely nothing in the charts, macroeconomics news/reports, or ancient tea leaves that suggests this is so. Furthermore, anybody to imply the bottom is in for 2010 is pure lunacy and dangerous to the general trading public. Anytime you have the masses lining up to listen to these financial gurus and act on their advice, I smell a beating coming on and this in general is why I’m an advocate for never listening to the news while you trade. It’s way to easy to 2nd guess your own trading system and be influenced by the news when these “well respected” gurus are going against your trading plan.

My point that I’m taking so long to get to is that when you listen to these guys it influences not only what you do today, but how you react to the markets tomorrow. Having a bullish bias totally takes you out of even considering that one of your long trades could be going against you and setting you up for big losses. That’s why I try to be extremely flexible with what the market is doing and follow a market timing system that takes me out of having to try and predict where the market is going. I haven’t the slightest idea where the market is going to be at the end of the year and nobody has any business answering that question because it stops you from focusing on what is going on right now. And right now is the most important part of trading.

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