Don Quixote, the demented old man who thought he was knight, spent his addled years wandering the countryside on a broken down horse tilting at windmills he perceived as threatening giants. The above is context, except for the part about tilting at windmills. The well-worn phrase describes an unproductive activity, an activity that, in the end, will not change anything – the windmill will still be standing when the old man is done.
Sometimes, I feel like I am tilting at windmills in my constant endeavor to point out that getting caught up in the negativity of the media hype is not helpful for developing and implementing strategies for trading or investing. True, important nuggets of data exist in all the news, good or bad, but the hyper-negative aura creates fear, fear creates hesitation, and hesitation creates bad decision making. The goal should be to ignore the constant negative drumbeat and analyze the data underneath so one can understand the reality, which could be good or it could be bad.
In the past couple of months, the constant drumbeat has been the economy is folding; we are headed back into recession. I, of course, tilted at that windmill using only the “soft patch” evidence consisting of Japan’s problems disrupting the global supply chain, rapidly rising oil prices, horribly bad weather, and the affect of, you guessed it, the negative media. Underneath that refrain from levelheaded analysts, indicators supported the notion, but few in the media emphasized that in the reporting. Yesterday, Japan reported its industrial output jumped to a positive 5.7%, up from a negative in the previous report. Today’s news, coupled with Japan’s news, makes it more difficult to ignore the data pointing to the soft patch easing …
Chicago purchasing managers index came in at a reading of 61.1, well above the 54 expected … a surprisingly strong report on manufacturing in the U.S. Midwest. Business activity in the region grew more than expected this month, lifted by a jump in new orders.
Borrowing by small U.S. businesses rose at a record pace in May, a sign that economic growth is poised to pick up in coming months … the overall volume of financing to U.S. small businesses, rose 26 percent in May from a year earlier. The index is now at its highest since July 2008, two months before the collapse of Lehman Brothers and the near derailment of the world financial system.
Information technology spending this year will grow faster than previously forecast, boosted by strong demand for new telecom gear and for computing hardware. Gartner said it now sees the global IT market growing 7.1 percent this year to $3.672 trillion. It had earlier forecast 5.6 percent growth this year.
I am not arguing that all of the economic headwinds are gone. In fact, economic derailment is still possible given what is facing both the U.S. and global economy. No, what I am saying is when it comes to making money work, one has to understand that the media turns windmills into threatening giants, when, in fact, they are just windmills.
Trade in the day – Invest in your life …
