I'm almost sick to my stomach with the "rollercoaster ride" that has been the stock market so far this year...for example the markets were down by over 300 points or almost 2% yesterday on economic news out of Europe and today they are up almost 2% on a positive jobs number...
Here are the 10 biggest things that should be learned from yesterday's Wall Street action:
1. In a market dominated by momentum-based algorithms, buyers live higher and sellers live lower. With price swings exaggerated by computer trading, the value of charts and technical analysis have lost some relevance. Simply put, the individual investor or money manager needs to take a step back and avoid this turbulent and extremely volatile market environment; now is not the time to be risky or invest aggressively.
2. As a result, the market has no memory from day to day.
3. Risk happens fast
4. As David Tepper (a famous money manager) said two months ago on CNBC -- when the flow changes, disruptions and bad things often happen. Note: The flow is changing and therefore I am concerned.
5. Whoever thinks the market hasn't advanced since 2012 to a large degree thanks to Federal Reserve largesse is loco. The market advance has not been the result of fantastic earnings or necessarily an increase in economic growth, but the result of the Federal Reserve handing out free money to corporations to "prop up" the economy.
6. Ignore the business TV "talking heads" who are self-confident and glib in view. They don't recognize that we live in a world where the only certainty is a lack of certainty (and they're probably trying to sell you something). There's no "secret sauce" on Wall Street.
7. We're not nearly as safe as investors and citizens as markets presume.
8. Our dependence on central planners and central bankers represents a slippery slope for markets and global economic growth. Planners and bankers are human and often make mistakes, particularly in forecasting.
9. A period of substandard global economic growth likely lies ahead. As such, worldwide growth is more susceptible to a "black swan event" (such as a terroist attack that we've seen this week or a massive stock market selloff) or even "baby swan" events.
10. A period of substandard investment returns could also lie ahead.
I certainly am not trying to be negative with this blog post...that being said, seeing stocks get CRUSHED yesterday only to see them up HUGE today is something that is hard to stomach and even harder to invest in. We are with out a doubt in a period filled with uncertainty and anyone who claims with certainty or extreme confidence to know what is going to happen is full of it...today's investment climate is simply a guessing mans game. I DO KNOW however that eventually a pattern(s) will emerge and that trend will be able to allow individuals to prosper and grow their investment assets in but speaking out of honesty I am uncertain as to how things are going to shake out over the next week.