Sorry!! The article you are trying to read is not available now.
Thank you very much;
you're only a step away from
downloading your reports.

Four Ways to Keep Your Sanity in a Crazy Market

By

Wall Street pro Smita Sadana provides her steady hand to shaking investors.

PrintPRINT
Many investors get stunned when the economy says one thing and the markets do another. Recently, I hear more retail investors saying, "This rally makes no sense. Unemployment is horrible and getting worse. The market is too crazy for me right now."

I called upon my friend and fellow Minyanville Professor Smita Sadana to offer some wisdom. Sadana is one of the best pros on Wall Street, and this is what she had to say about this important issue:

Damien Hoffman: Smita, what advice do you have for investors or traders who can't believe their eyes as the rally continues in the face of weak economic data?

Smita Sadana: Damien, this is an excellent question and thanks for asking for my opinion on this important matter. The reality is that your question transcends the current market and is true for most market participants in many market timeframes.

Here're my thoughts on how to deal with the market as it is, and not as they would like the market to be.

1. Keep an open mind.

The test of a first-rate intelligence is the ability to hold two opposing ideas in mind at the same time and still function.
-- F. Scott Fitzgerald

Don't be wedded to any thought process, even if it appears intellectually correct. I've written about this extremely critical issue at Minyanville (See Why Investors Should Keep Enemies Close).

If our bias is bullish, we'll keep flicking through channels until we find someone who will tell us what we want to hear -- that the market is going much higher and it's advisable to put all your money in the market.

If we have a bearish bent, we'll scout through websites and bookmark those that enforce our already bearish beliefs and back it with evidence that we like. Even if dissenting thoughts crop up, we let them gather dust and take solace in the factual data that supports our original thesis.

I often advocate that investors stroll out of their comfort zones and add a few dissenters to their trusted friends via websites that offer opposing views. (You don't have to swing the pendulum all the way). Even if the opposing views are aggravating to listen to and can turn out to be wrong, they often add depth to our perspective since we have to defend our original views.

Dissenters can give us the greatest gift of all -- an open mind, which is the prerequisite for a flexible approach toward investing.

2. Don't confuse time frames.

There are many ways of discerning a trend. In Bull Market Timer, for instance, we use an intermediate-term trend to modulate exposure to the market and manage portfolio-allocation based on technical assessment of the intermediate trend.
< Previous
No positions in stocks mentioned.
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.
PrintPRINT
 
Featured Videos

WHAT'S POPULAR IN THE VILLE