Gleaning

Earlier this morning I gave another guess as to what I thought the market might do today and like yesterday it turned out to be correct. Yesterday I tried to hit upon how useless the exercise is in terms of managing a long-term portfolio.

I said this so that people would not think I was condoning this type of trade. To clarify there are people that are very good at trading these types of moves but the average do-it-yourselfer should probably stay away from the trade.

Despite the above beliefs I think there is value in assessing the market over very short time periods. The idea here is the potential to have a feel for how the market is dealing with current events. The benefit to this could be that you avoid rash emotional decisions in your portfolio. This is not to say you won’t still get things wrong and no one can always know what the market will do either.

To the extent that you can be right about the mood of the market every now and then it can make you a better investor. Also the gyration going on today will probably repeat again in your investing lifetime. A phrase I use occasionally to describe something in the market is to say I have seen this movie before. We are all currently watching a movie. Maybe you have seen it before or maybe not but you will see it again in the future.