Josh calls out those who have dug their heels in and fought the tape the whole way up. Are these folks part of your daily media diet?

He notes:

“Some people need to reflect back on what they’ve been doing for the last 8,000 points. Others need to reconsider whom they’ve been listening to and what they’ve been reading all this time. Have their influencers gotten things mostly right or mostly wrong? Have they been focused on the bigger issues or missing the forest due to over-examination of each tree?

Nobody gets everything right, but small errors in judgment and minor course corrections are preferable to a complete and total inability to wake up. I know that hindsight makes everything seem obvious and this market has been anything but simple the entire way up…

If you’ve been listening to people who’ve not grasped this concept for the last few thousand points, ask yourself what you plan to do about it? What new choices will you make about the things you’ll pay attention to in the future?”

The people who have been consistently forecasting the future (as opposed to analyzing the present) have, not surprisingly been getting it wrong. What is surprising is their lack of error correction method. We expect to be wrong, have built in a recognition and admission process that prevents us from staying wrong.

This is not to suggest the world is hunky dory and there is nothing to be concerned about. However, there is an issue with those who philosophically cannot wrap their heads around equity markets going up. I am not suggesting that you need to be sanguine all the time — but your methodology has to be more than cherry picking the worst headlines and positioning your portfolio for the next crash, year after year.

There are plenty of things to be concerned about — but there always are. The recession porn crowd’s constant warning of impending doom has not exactly been adding value to your media diet — or your portfolio.

Instead, try watching inputs and data instead of headlines. Consider signals like the A/D line, equity valuations and trend. I find that  is a more productive use of my time than indulging in recession port and fighting the tape the whole way up.

As we have discussed repeatedly, what you read and who you listen to can have a significant impact on your net wealth.

Choose your Yodas wisely.

Q&A: The Price of Paying Attention  (November 3rd, 2012)

After a recession, the least rational rise (temporarily) to prominence. Ignore them.  (June 4, 2011)

Category: Philosophy, Really, really bad calls

Please use the comments to demonstrate your own ignorance, unfamiliarity with empirical data and lack of respect for scientific knowledge. Be sure to create straw men and argue against things I have neither said nor implied. If you could repeat previously discredited memes or steer the conversation into irrelevant, off topic discussions, it would be appreciated. Lastly, kindly forgo all civility in your discourse . . . you are, after all, anonymous.

11 Responses to “QOTD: 8,000 Points Later . . .”

  1. dctodd27 says:

    BR -

    What does your analysis of the present tell us about where we are in the market cycle?


  2. spooz says:

    Well, the retail investor may have missed it, but they sure aren’t jumping in now. Cramer and CNBC are yesterday’s yoda, now zerohedge has captured the zeitgeist, from yesterday’s links:

    “That’s right: on one hand CNBC’s most overcaffeinated anchor [Cramer] admits that the market is nothing but uncontrollable fraud, and on the other he beckons viewers and listeners, usually with the assistance of assorted bovine sounds, to “buy, buy, buy.”

    Perhaps the greater fool is truly dead, or simply the embedded hypocrisy of the CNBC stock “infomercial” is so transparent that nobody really cares what the Comcast subsidiary’s paid entertainers have to say any more.”

    I think the retail investor is sitting this cycle out, somebody else will have to live in the house of pain when the correction comes. But, hey, who says it ever has to come. Maybe central banks can smooth things out forever.

  3. Concerned Neighbour says:

    It’s one thing to know the markets – such as they are – can not go down. It is another thing entirely to entrust a significant portion of one’s hard-earned and meagre life savings to said markets when one is aware of how artificial, manipulated, and corrupt they are.

    Here are, among many other things, what main street sees:
    - widespread white-collar criminality and essentially zero law enforcement
    - accounting rules changed on the fly to hide the truth
    - central banks rigging the markets, in some cases by outright buying stocks directly (as opposed to how the rest do it i.e. by having QE recipients buy them)
    - wealth continuing to concentrate in corporations and the uber wealthy, while they struggle month to month and often have to withdraw funds from their savings to get by

    This is a market by and for the 1%.

  4. [...] QotD, 8000 Points++, ht Barry [...]

  5. Greg0658 says:

    brushing off the nose rub .. explains “I’m generally with spooz .. some market this is”
    slow motion train wreck was false ? or are we advising get ready to jump at the exact time the train crosses the river – have the bag of gold on a rope and a floatation device

    if I were to ask – (again) – limit deductables from business profits: things like spending on advertising and its related perks, CEO salaries, force an interest payment, limit internal buybacks

    > all of that somehow (& more) .. but since there is none of that we can do any longer .. moms & dads save your kids (if you can) as you cash out of the OpSys we used to have (maybe never did – it was all an illusion to get to where we are now)

    don’t listen to me tho – that whole dualing super novas

    ps – the 1/1000th second trade’g flowchart was awesome – just didn’t understand enough to share it

  6. [...] It’s one thing to be wrong, it’s another thing to stay wrong.  (Big Picture) [...]

  7. DrFish says:

    i’m with u, Concerned Neighbor. and re “Consider signals like the A/D line, equity valuations and trend”, the s&p 300 ma has u in then out then in, etc.. besides, just which valuation measure do u recommend?

  8. rd says:

    An explanation has been found. Financial advisors have PTSD because of the events in 2008.

    There is apparently a Journal of Financial Therapy by the Association of Financial Therapy – who knew?

  9. rd says:

    The perpetual doom and gloomers are missing the big picture. Starting in the mid-1800s, the world changed. Up until then almost everybody was a subsistence farmer trying to protect their wheat and potatoes from marauding armies. Hobbes summed it up as “Life is cold, brutal, and short.”

    Since then the indutrial and subsquent revolutions are improving our standard of living regularly. Despite all of the environmental, moral, financial etc. gloomsters it is likely that this will continue for quite a while. It may slow some in the developed world since it is, well, developed. However, there is still lots of opportunity for improvement and growth for the remaining few billion people which is why I have a bunch of money allocated to emerging markets as this is likely where much of the growth will be over the coming decades.

    As a result, we see a steady upward trend in GDP and wealth, even on an inflation-adjusted basis. The hills of irrational exuberances and dips of crushing crashes still track this overall upward trend. So in the long-reun it pays to be optimistic (as Warren Buffet and Jack Bogle constantly point out). However, you have to make sure you have a sound boat (investment strategy, philosophy of life etc.) and steel yourself for the waves that inveitably occur. I think we will see another significant dip in the next few years, but it is very unlikely to be the end of civilization as we know it, and if it is, then our portfolio won’t matter anyway.

    It is pretty clear by now that even in the worst markets, a steady diversified approach will get you to the other side whole, and even with profits. This is hard to remember in October 2008, but it has been shown to occur even in the Great Depression. I think one of the biggest problems is the constant showing of nominal value graphs instead of inflation-adjusted total return graphs for the markets. Those latter ones are what give the real picture, especially in the wealth accumulation years.

  10. Pantmaker says:

    Josh….humility grasshopper.

  11. panskeptic says:

    Cramer and the Kitchen Symphony banging on pots and pans over at CNBC may be worthless, but for god’s sake don’t waste time with the fetuses at Zerohedge.

    Their analyses are stridently wrong, their predictions futile, their advice fatal and their insistence on Aryan Blood for traders is downright nasty. Achtung!