This morning, one of my readers sent me a link to an article from a concern that “sells” proprietary charting information (with its proprietary formula), and to do that, it mails out analysis based on its formulaic charting. Anyway, the analysis spoke to the “future” of the market (an apocalyptic future), so he asked me what I thought …
Sounds like a lot of hocus pocus to me. I like to deal in reality, so I look to the fundamentals above everything else. Technical analysis combined with forecast charts based on personal formulas are as accurate as, oh, guessing. Yes, he raises the same concerns as everyone else, regarding QE, et al., but since the market reflects the collective consciousness of all its participants, it can do anything at any time. However, as I have written in my column more than once, the market ultimately moves on profit and growth. If companies are showing profits and the economy is growing, so goes the market. If companies are not showing profit and the economy is not growing, so goes the market. What happens in between is uncertainty to varying degrees, and the market has, does, and will reflect this. The trick is to understand this in the broadest sense, and, thus, act accordingly.
By the way, what exactly does the following quote mean (This appeared in the analysis he sent me.)? “… let the market seek its own free-market-equilibrium …”
The market, with or without the Fed, is as “free” as it will ever get. If it is not the Fed influencing the market, it is the combination of all the big banks creating a $7 trillion bubble (and you see where that took us), which, by the way, is to magnitude greater than anything the Fed has done so far. It is a myth that the market or the economy is free. There is no such thing, other than in the minds of those who believed it was ever or could ever be free. If it ain’t the Fed, it is big money, and, for my money, I will bet on the government every time.
As I said, I look to the fundamentals, and the excerpt below is the type of information I seek out. Reading this, I ask myself, “Which makes more sense to me, in terms of “predicting” future market activity, the information below, or some peddler of financial voodoo?” True, the voice below is that of bankers, the same ilk that brought us the financial disaster of 2008, but if they are not acting out of greed, they are acting out of a need to grow wealth. Since we are not in a bubble right now, I accept their analysis derives from a need to grow wealth.
A nascent recovery in global deal making, focused on safer deals with clear strategic logic, probably marks the start of several years of rising mergers and acquisitions, senior bankers told the Reuters Global M&A Summit. Still, while company earnings and balance sheets are strong, bankers said economic fragility, natural disaster, and political tumult in the Middle East were hurting corporate confidence and holding back a more robust M&A recovery.
The trick is to know when greed takes over and the upward growth can no longer sustain itself. I have a much better idea of this point, now that I survived the 2008 debacle.
Trade in the day – Invest in your life …
