Holy smokes batman!
Morgan Stanley announced that their 5 key timing indicators are a flashing green light to investors (not sure if that is more exciting, or more risky than a steady green light or both..) they call it a ‘full house’, from poker, that game where you gamble.
Apparently, they have a set of indicators that help predict the future, they are:
- CMTI
- Risk
- Fundamentals
- Composite Valuation Indicator
- Capitulation Index
But what about emotion?
Graham Secker, the bank’s chief European equity strategist, said the sell-off over recent weeks is largely driven by emotion and has little to do with the underlying outlook for the world economy.
Me, I’m kinda baffled. They have 5 fancy metrics, but ultimately believe that the recent sell off was due to emotion… shouldn’t the people gazing into crystal balls be worried about emotion going forward if that is the thing that will impact prices? How does knowing that CMTI is now in Capricorn make you feel? Warm and cozy, ready to go ‘all in’?
My advice… get a long term plan, and try to filter out all this noise.
More on this at FTAlphaville and The Telegraph
Can’t you make an argument that if the long term indicators point to buy and there is a short term correction based on emotion, now is a good time to start implementing your long term plan?
I do agree with you. I used to “play” the market. Now I buy the whole market. I don’t sell anymore if possible. I buy a little more every month.
You can make an argument for anything if you like 🙂
Here’s my counter to that though: Yes, it makes sense.. but, if your decision to execute now is based on an external influence, what happens if that expectation is not met? If you truly have a long term plan but have been ‘waiting it out’ for MS or whoever to chime in with some comment, I think you might have behavioral issues with the plan.
My concern then becomes that if the market experiences a drop, you panic, and pull back out again, waiting for the next ‘indicator’.
There’s something of a conflict between a long term, well constructed strategy and waiting for some sort of poker tell.
More mumbo -jumbo from Morgan.
I am surprised how technical analysis survives to this day. I’d like to be paid for giving advice that works some times and not others.
Technical analysis (which is what their 5 indicators really are) is the easy substitute for people incapable or unwilling to do the work necessary to find companies that will outperform.
The “game” of trading is a winning one if you have better tools and information than the average retail trader. I have 17 years of profits to show for it. But, then, the average person is not going to get the sort of access and info I have–not because they can’t, but because they don’t know it exists.
All these so-called “investment bankers/firms” want us to keep investing in stock market so that they can take their money out while we are left with holding the bag. They have the inside knowledge and access to data that normal citizens don’t have for investments.
In around 2000, a chimp was told to put some darts on the board on few companies stocks. The chimp actually beat most of the investment/mutual fund returns!