On the Trail of Mr. Market
Many years ago, I once worked in Law Enforcement on the trail of an escaped prisoner. He had cut his arm on razor wire and was easy to describe.
"Did you see a guy in a t shirt and jeans with blood all over his arm?"
"Yeah, he's hitched a ride and went north, that way."
We followed for hours, as he hitched one ride after another.
We never found him.
But there was another team who went to see his parents. They figured if he had escaped, then he was homesick. His parents and the officers were very polite to each other. The parents served cookies. They talked about their son and said, "We don't know what went wrong; we gave him everything he ever wanted."
Everyone nodded, and then shook their heads, thinking
that perhaps the young man had been spoiled and went astray.
After a few hours the young man showed up. The officers kept a respectful distance and let the family visit for a while. The arm wasn't too bad, so he was okay to stay and have some cookies, and then he nodded to the officers when he was ready to go back.
Too often we follow Mr. Market like he's an escaped convict hitching one random ride after another and never catching him.
That's emotional investing. We'll spin our wheels and might make some progress, but we'll never quite catch our quarry. Always chasing the last place he's been.
Here at Yields4U.com we like to use rules and logic. We aren't hot on the trail of Mr. Market looking for the last car he hitched a ride in. Instead, we're looking for the neighborhood he might wish to go next, and then we settle down in the most attractive home to wait for him to come to us.
Those neighborhoods have been neglected for a while. The best homes are leaving their lights on for us. Mr. Market has to be getting homesick.
So let's look around the neighborhood:
Based on our research the industries Mr. Market looks to be eying paint a picture of home and comfort. It's Holiday time, after all. Mom and Pop have been trying to stay home in case their son shows up, so they are having their Christmas presents delivered: (PACKAGE, RETAILSL).
Pop is a Trucker, and is making his last hauls of the year to some construction projects: (HEAVYTRK, ENGCON).
His truck uses a lot of fuel, and so do the construction machines he supplies. (OILFIELD, GASDIVRS)
Mom is a bit of a worrier, so she's looking for a safe place to park their money because neither of them can make sense of the news and are scared to pick their own stocks. Might as well find a fat mattress to put the money in: (INVBANK, INVEST2, INVEST6).
No, no time for plans. They want to finish everything up so they can wait in peace with the Peace Officers. Perhaps a nice movie or a smoke: (CABLETV, TOBACCO)
Is Mr. Market's family bullish or bearish?
Neither. They are looking for a break. They aren't trying to find the next ten bagger stock and aren't quite running for cash either. They just want to ignore the political drama in the news because they don't have time to worry about that. They'd rather have someone else figure out the "future" while they take care of the present.
Goldman Sachs looks about as decent as the mattress in the guest room. A little smellier, but at least they don't have to guard the bedroom in case their son is looking to smoke something stronger than tobacco.
Pull out the remote on the CableTV Mr. Policeman.
Have some cookies. Mr. Market will come home. At the Holidays, everyone does.
*Past performance is no guarantee of future success. This story is allegorical in nature and not intended to provide specific investment advice. There are many factors that influence market movements, at Yields4U.com we use rules and logic to govern our investment decisions and leave market timing to the speculators. As always, the most important part of any investment strategy is to ensure that you have a process that is based on facts and logic rather than emotion. All investments carry the risk of loss, what downside risk management techniques are you using to limit your losses if the market crashes by 10%, 20%, or even 40%?