Do Yourself A Favor; Do Not Follow The Pundits
January 8, 2014, Wednesday, 13:22 GMT | 08:22 EST | 17:52 IST | 20:22 SGT
The prognosticators have been busy over the past few days with their predictions for 2014. Some pundits and experts will make wild guesses that if true are sure to raise comparisons to Nostradamus. Of course, the ones I am most interested in are market-related, specifically the predictions about how the market will move and when those moves will occur.
If we look to psychology and human behavior we know patterns and trends repeat themselves on the spectrum of fear and greed. Further, the herd mentality tends to persist, especially since most are not contrarian in nature. Therefore, most will go with the flow of the consensus, and what we are hearing now is a correction is imminent - just because we haven't had one.
After a 10% correction or something like that, then it's time to get back in. It's like a clear roadmap, let's get everyone on board and do the same thing! However, that has been said for the past three months, nearly 100+ SPX points higher. To a chartist or technician, that sounds ridiculous. Trends last far longer and deeper than anyone can imagine. But nothing is that clean and easy - but then again, a broken clock is always right twice a day.
In 2014, I would caution against just blindly following the advice of experts, pundits and others who clearly do not have your best interest in mind. Most just talk their book or make a name for themselves. That's fine; we can turn it off and focus on what the market is telling us.