You're Kidding

Is It Time to Buy? What History Shows

It never ceases to amaze me when I see the words of people who basically think that they can "read" charts and "see" technicals in the lines and points and curves, that enables them to decipher the "code" of PAST EVENTS, and then conclude that they can see "trends" that FUTURE EVENTS will follow, to a greater degree of certainty than what flipping a coin would tell them.

Pardon me for being a skeptic, but I took a lot of math in school and have lived through a number of decades in my life where I learned that the future either, 1) has little or nothing to do with the past, or, 2) it has a lot to do with it. Unfortunately, you never know before the future arrives in the present, and then slips into the past, whether your predictive model was correct or not. If you are dealing with "will the market go up for awhile" or "will it go down for awhile," then your predictive model has about a 50-50 chance of succeeding. This is the same chance you get from flipping coins. And don't forget, flipping coins can produce some stretches of 3,4,5,or 6 or even more, heads or tails in a row. This is, of course, a "trend" which tells us exactly what? The future? I'm afraid not.

Mathematicians either laugh or express sadness when they hear about the gullibility of people who think like this. But in the long run its probably no worse than any other method of trying to make money in the market. In the end, the direction we head, is based on an emotional reaction to what we think will happen in the future, and for those of us human beings who don't have crystal balls, this is what we are stuck with.

But please, try and understand this: there is nothing whatsoever scientific or mathematical about "charting." If you think there is, then you don't understand what science is all about. You can prove this to yourself by trying to read charts from the past, where you can see what the "future" holds immediately by turning to the next page of the book, or the web site. You will quickly learn that it is impossible to predict the future in any way, manner, or form, better than mere chance.

My suggestion, for what its worth, is to concentrate on the macro view. For example, unemployment figures, bankruptcies, consumer sentiment, wholesale purchasing, ocean shipping in dry dock, asset values, bank failures, downsizings, etc., taken as a whole, world wide, and trending the same way together, in a way not seen since the Great Depression, says that we just might be in deep, deep, trouble. Unless of course, you think these things can all turn around faster than they started dropping. The likely hood of that? My experience tells me less than a 50% chance. But I guess that judgment is about the past, too, isn't it?

See what I mean?