Turley Muller

Of Blind Squirrels and Flying Pigs: The Fallacy of Market Predictions

Great Article. I especially agree with the market discounting mechanism of known information and collective sentiment.

Everyday I read/hear an investor recommending to stay away from financials. Why? (Basically everyonbe gives the same reason)

-Because we just don't know how bad it really is and everyday we wait for the next shoe to drop and when it happens we still know there are more to follow. We know financials are facing a crisis, but until there's visibility I would stay away. The unknown is just too great.

Do they mean wait for visibility so then we can buy shares AFTER they have gone up 30% or what have you.

The whole market knows 'they don't know" that's why financial shares have gotten a beat-down- to a reduced price to compensate for the risk (which is defined by uncertainty).

And when the next shoe drops, will shares fall? Investors expect more writedowns so I think let the shoes drop, shares will probably rise since those events at least should start bringing in more clarity.

Some financial stocks should trade at these levels or even lower, and there are some that are very oversold. Still wouldn't touch countrywide though.

Thanks for sharing your insight.