Peter Davis

The Bear Turns Mildly Bullish

Well, that's about the dumbest thing I've read in a while. Basically, you're saying that the market must be capitulating because things are so bad. Good thing you wrote it before today's selloff.

Why is everyone trying to call a bottom? This market shows no signs of capitulation, just more and more selling.

Why Technical Analysis is Nonsense

With all due respect, that's about the dumbest thing I've ever heard. Fundamental analysis can be very effective, but so can technical analysis. I wonder what the institutional investors who have shunned TA are saying now as they're taking a bath from myriad bad investments.

I know of many technicians who have been wildly successful and would put their records up against anyones. While the author may not find TA to be useful, that doesn't mean it is empirically invalid.

Th fundamentalists can try to bottom fish all they want and continue trying to buy value only to watch "cheap" get "far cheaper". The method I employ called for a retest of August lows in the S&P over a month and a half ago. It reasserted that forecast when the market rallied into Dec. 10th. As I write this, we're about 6 points above that low. No fundamental analysis went into this forecast.

It is my opinion that any method can be valid, provided that it is traded with discipline and consistency. It's been my experience that those who speak in absolutes are the most dangerous ones, because they fail to see alternative opinions. On the other hand, this technician doesn't mind, because such foolishness makes for great trades.

Can The Fed Inflate Its Way Out of Housing, Credit Mess?

Much like Mr. Bohrer writes, I, too, love arguing with fools. I actually had someone tell me the other day that market crashes are caused by lack of information disclosure (i.e. market participants don't have all the relevant information and therefore act irrationally). I honestly didn't know where to start my response other than to point out the fact that people rarely act rationally and what is rational to one person is completely irrational to another.

As for the presence of fools, even in the world of high finance, why not? I've often thought that financial "professionals" get far too easy a ride from the general public. Because most people are mystified and intimidated by the markets, they assume that everyone who makes their living in the markets is somehow brilliant. I couldn't disagree more.

Basic Darwinian theory tells us that survival indeed belongs to the fittest. Expanding upon that, I'd argue that the percentage of people who are highly competent at whatever they choose to do is small. Most people are average; thus, the definition of the word. If most people are average, it's reasonable to assume that they will fall prey to the same mistakes, the same follies. Why should financial professionals be any different?

Throw in ego, greed and fear and the "average" mistakes become real doozies, but is there really any surprise? Isn't history rife with bubbles and crashes caused by the wisdom of the average masses?

So I say, "Let the fools continue!" It sure makes for great arguments.