Monday, December 17, 2012

Do Gods Hate Bears?

Poor bears. They are not getting a break. That’s very unfair. What will happen to ZH and all those who are waiting for the next disaster (just round the corner) for the last so many years?

Now that the year is coming to an end, what have we learned? I don’t know about you, but here are few things I would include in the learning experience:

1.       News is noise: Believe me, very rarely price moves based on news. Rather, it is the price action which makes the news. Only few months back, analysts were falling over each other to bring positive news from Apple and up the price target. Now that Apple is around $ 500, they are finding news to downgrade it. My take, stay away from news, mute the talking heads and stop reacting to things.
2.       Stop chasing beta: The losses arise because we take undue risk. We take risk because we want to chase performance.  Relax; stop chasing some imaginary benchmarks, stop comparing how others are doing. Just focus on what is your own goal and be realistic about it.
3.       Don’t listen to too many gurus: I have seen otherwise intelligent folks reading 100s of blogs and newsletters and getting confused in the process. Identify someone who has been consistent and stick with him/her. Everyone is correct at some point or other. Even a broken watch shows correct time twice a day. The trick is to find someone who is correct more times than not.  But use him/her as a pole for pushing the boat. Nothing beats your own analysis and due diligence. After all, it is your money which is at stake.

Back to markets, thank my lucky starts I did not short the indices last week. I should run a subscription service just to advice folks not to front run and keep capital safe! In so far as the two picks of last night, I am still waiting for them to break the range. Silver did not test $ 33 nor did it break below $ 32. Wheat is also stuck between $ 800- $ 820 and a consolidation here will be good for going long.  Euro is also in a consolidation mode and despite all the very smart and witty posts regarding its demise, it is holding up.  Short term, we better have some weakness in the market soon before the cycles bottom time wise.

With the market remaining in the chop zone, it is very frustrating for investors and traders who always feel the need to do something. But as I have demonstrated time and again that break up or down of the range, coupled with cycle directions, provide the best guidance in this uncertain market.

That’s all for this evening. Patience is the watchword for now. Thanks for sharing my thoughts. As always stay nimble and stay safe.