Investing in a World of Intervention
To succeed in this market, you need to think like a regulator.
and you don't feel much like riding, you just wish the trip was through.
Say, here I am, on the road again. There I am, up on the stage.
Here I go, playing star again.
There I go, turn the page.
Bob Seger and the Silver Bullet Band
"Turn the Page"
Will Turning the Page Be a Silver Bullet?
I'm not sure what makes people believe that turning the calendar to a new year will be a "magic bullet." I have to admit to having my own New Year's resolutions: Lose weight, stop smoking, etc, etc, etc. But resolutions or no, when we wake up on January 1st, not much has changed, right? Our resolve almost immediately starts to fade, and most folks revert to their ways of old. Present company most definitely included.
When the history books have been written, 2008 may very well be remembered as "the Year of Intervention." For those who have read some of my previous pieces, that may sound a bit whiny, and/or frustrated, - and indeed you're right. It is.
Winding one's way through this market and economy is challenging enough without near-daily interruptions and interventions from governmental and quasi-governmental authorities (such as the Treasury Department and the Federal Reserve). The most problematic aspect of these constant interventions? That they ask us to change our behavior as investors - that alone could explain the volatility of truly historic proportions we've been experiencing.
Simply put, free markets are no longer free; outside, seemingly random influences intrude upon them, and seem to make our disciplines moot. But rather than whining, we must ask ourselves how do we, as investors, react to these "outside influences"?
Interaction Versus Intervention
Let's face it: Most of us are used to free markets. In free markets, we're left to our own devices to sort out the good from the bad, the value from the value traps, growth versus value, and so on.
No one has been trained how to act given the near-random, unprecedentedly high levels of intervention.
Click Here to Purchase "Bond Basics: A Q&A with Bennet Sedacca"
The information on this website solely reflects the analysis of or opinion about the performance of securities and financial markets by the writers whose articles appear on the site. The views expressed by the writers are not necessarily the views of Minyanville Media, Inc. or members of its management. Nothing contained on the website is intended to constitute a recommendation or advice addressed to an individual investor or category of investors to purchase, sell or hold any security, or to take any action with respect to the prospective movement of the securities markets or to solicit the purchase or sale of any security. Any investment decisions must be made by the reader either individually or in consultation with his or her investment professional. Minyanville writers and staff may trade or hold positions in securities that are discussed in articles appearing on the website. Writers of articles are required to disclose whether they have a position in any stock or fund discussed in an article, but are not permitted to disclose the size or direction of the position. Nothing on this website is intended to solicit business of any kind for a writer's business or fund. Minyanville management and staff as well as contributing writers will not respond to emails or other communications requesting investment advice.
Copyright 2011 Minyanville Media, Inc. All Rights Reserved.
Daily Recap Newsletter