Tuesday, February 12, 2008

Why The Market Will Piss You Off

The market just loves to move up and down for no particular good reason. This has been especially true the last few weeks where the market has seen fit to gyrate up and down, mostly down, somewhat erratically. So today I go to Yahoo Finance to read the above as the top story.

Now really, this is a non story. But for some reason the so called "experts" are pointing to this as why the market has rallied. Is there really anyone out there who didn't think Buffet would get in on this market? The entire sub-prime sector is in turmoil. People don't know what is going on with these mortgages and there is wide spread panic. When people panic, Buffet makes a fortune. I for one have been one of the loudest voices for quite some time that the housing market has been over-inflated and that it would come bite us in the ass very soon. That being said, we have probably reached a point where most of the dust has settled and people are going to start looking around for bargains.

But these are the types of things that can infuriate novice investors. The markets can and will move seemingly randomly in the short term. I can't tell you the number of stocks I've bought with solid reasoning only to lose my shirt because my stock was out of favor at the moment. The market determined what my stock was worth and it just didn't agree with me. It wasn't based on data, it was based on psychology.

Don't be shocked if the market just dips on no news tomorrow, it went up today on very little.

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