Enough With The Negativity
- Posted by Joe Fahmy
- on July 4th, 2012
Over the past few weeks, it seems like every time I turn on the news, read my Twitter stream, or talk to friends, all I hear is doom and gloom. The concerns are endless: Europe, unemployment, uncertainty about the US elections, tensions in the Middle East, QE3, China slowing down, etc. etc. etc. Here are a few thoughts that immediately come to mind:
1) Stop being an economist! As a trader, you should turn off all the noise and focus on the price action of the market and its individual stocks. If strong fundamental companies are breaking out of sound technical bases and acting well, that’s ALL you need to know. I keep the news on to know what’s happening in the world, but if you listen to it long enough, it could possibly keep you on the sidelines during a nice rally.
2) If you think what we’re currently going through as a country is so bad, study history. I don’t mean to get all patriotic on this July 4th, but the US has seen MUCH WORSE conditions over the years and one thing we ALWAYS do is bounce back strong! There are some tremendous growth companies out there that are performing very well in this challenging economy. Again, if you listen to all the negative bullshit, it could influence you to miss some potentially great opportunities.
3) As a trader, all you need is a few good months to make your year. Who cares if a short-term uptrend happens during an overall Bear Market, take advantage of it! Again, stop worrying about China’s PMI, the ISM Index, and the Nonfarm Payrolls number. All of these are LAGGING indicators, while the stock market is a LEADING indicator.
4) I love this statistic provided by Eddy Elfenbein (@EddyElfenbein): Since 1964, the eight times an incumbent has run for re-election, the S&P 500 has gained an average of 9.7% from June to December. Again, who cares about the politics of it all. If they want to flood the system with liquidity so that certain people can keep their jobs, don’t argue with it! Take advantage of it!
As I’ve said many times, I’m a trader and NOT an investor. I look for the 2-3 times a year the market is healthy and do my best to trade those times effectively. Even if these rallies occur in the middle of overall Bear Markets, I don’t care because when I see the warning signs, I have the confidence to get out and wait for healthier conditions. One thing I can guarantee is we’ll see another rally and guess what? It will be followed by another correction. It’s been that way for the past 100 years and that cycle will continue for the next 100. Another thing I know is it makes no sense to focus on all the negativity and bet on the end of the world…because even if you’re right, there will be no one around to pay you off
The information in this blog post represents my own opinions and does not contain a recommendation for any particular security or investment. I or my affiliates may hold positions or other interests in securities mentioned in the Blog, please see my Disclaimer page for my full disclaimer.
Joseph Fahmy is the managing director at Zor Capital, LLC, a New York based investment management firm. Joe has over 17 years of trading experience...More »