A piece in The Wall Street Journal laments that the day to day gyrations of the market are hard to predict. Duh. Furthermore, the methods that once appeared to be effective in making predictions no longer work. Double-duh.
It's an interesting piece, and a good one, focused on the role that hedge funds may be playing in increasing market volatility. The problem is this: who really cares? According to some, days where 90% of shares traded in the same direction, was a good indicator of a bottom:
"This used to be a good signal of a major bottom," says Tim Hayes, Ned Davis's chief investment strategist. "Now, it could be turning into a signal of the end of a less-significant market correction -- or it could be turning into an inconsistent signal" that simply means investors are anxious
Well wasn't that enlightening?
There have been very few market prognosticators, and not enough to make me think it's anything other than luck, who have correctly predicted the markets swings over an extended period of time. Does any of this volatility matter for the long-term investor? No, and the long-term investor is the only one who's likely to do well over the long-term.
So sit back, dollar-cost average, and count on the long-term growth of the economy for long-term returns. And don't pay attention to investment strategists who use the word could twice in the same sentence.
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Reader Comments (Page 1 of 1)
9-14-2007 @ 4:20AM
David Miller said...
Every Federal Reserves job is to make their countries currency worth 100%, not to insure the Market's are stable or secure. Their job's are suppose to be to their citizen's and countries, not to Global Expansion. The United States has tried to expand Democracy, Printed more money for the Big Money, and has forgotten about it's citizen's. The real truth to those individual's and the Bleeding Heart's is this, we can't keep going in the hole for a wish of passion. It simply makes no sense, that's the truth. Our Federal Reserve should not print more money or lower the Prime Interest Raate just to help with poor judgement's and mistakes made by Investor's !!!!! I vote not to change the Prime !!!!!