Lengthen Your Timeframe and Step Back

The great thing about the financial web is that it’s an idea exchange and it’s educating millions of readers on hyper-specific topics that only the pros have an interest in writing about.  The drawback, however, is that there are many bloggers who simply need something to write about everyday, regardless of whether or not it matters. In most cases, they have no idea whether or not it matters and in some cases they know that it doesn’t but they write it anyway, complete with preposterously urgent title.

This leads to an emphasis on minor economic data points (JUNE DURABLE GOODS PLUMMETS!) and irrelevant headlines (SPANISH PM RAJOY SAYS CONDITIONALITY OF ECB BOND PURCHASING PROGRAMME ‘UNACCEPTABLE‘).

It sounds silly in my examples but you wouldn’t believe the amount of people reacting to this stuff, hopping from foot to foot while Mr. Market laughs his sick fucking ass off.

My friend Dynamic Hedge has a blockbuster post up right now that I think will help you understand and internalize this concept. Rather than churn yourself up each day, sometimes the best thing to do is lengthen your time horizon and step back a bit for perspective…

How did we get here?  More importantly how could anyone stay bullish amid the bearish hype permeating through various media outlets?  I’ve argued for a long time that we’re in a choppy bull market and the upside must be respected.  Back in June, I wrote a post about top-down macro fundamentals.  I advised readers as to the correct manner to read government agency or academic data: squint to the point where only vague shapes and colors are recognizable.  Sophisticated investors call this “trend analysis”.  Amateur traders second guess every data point and chop their way to ruin.

Keep Reading:

Market Fundamentals: Only the Brain Damaged Survive (Dynamic Hedge)