Understanding The Market

I always find it amazing how few people understand how the market really works. If one were not involved in markets and turned on the news tonight they will probably hear that stocks went up because of Ben Bernanke's speech. Or better yet on the GDP revision, ignoring the fact that the S&P 500 was down 10 handles after the report. A nice and simple sound bite.

The real reason the market is up is more complex. Most don't have the attention span to watch a TV segment about it and would just tune out. Nobody really knows why the market is higher for sure and one can only guess why millions of market participants do what they do. I believe the main reason we are up is because negativity has been building up for weeks and we finally saw a capitulatory bottom this morning on the Intel news. In simple terms everybody who wanted to sell did, leaving no more sellers.

I have a tip for Ben Bernanke. Only give speeches when the market is oversold and sentiment is extremely negative. You will be a national hero and everybody will say what a genius you are, even if you just mumble some nonsense like Greenspan did.


Anonymous said...

Can you give a forward forecast.

How to play next week and next month?

Will this be a one day event? Will we sell off in Sept?

You have said we will go lower into years end? Still think so? How low?

Thanks in advance.

Onlooker said...

Too true, ain't it? It is rather humorous to watch the rationalizations that are given for the markets' moves, and the tortured logic that is all too often used in doing so.