It’s frankly astounding to me how much power the Federal Reserve holds over the psychology of market participants. One reassuring comment from Jay Powell can send the market 5% higher in a week, while an offhand comment, such as we saw in October, can throw the market into a severe correction.
Article Category: Psychology
I’ve used this analogy before, but on days like today, one can’t help but feel like investors are nothing more than Pavlov’s dogs, salivating for the inevitable treat they’ve been conditioned to expect. As for Pavlov, he is of course played by Fed Chairman Jerome Powell, also known as the Wizard of Oz.
The final quarter of each year is often a seasonally strong period for stocks, but not so this year, as the market found itself in a seemingly endless freefall. This culminated with the final month of the year being the worse December since the Great Depression, a rather unnerving fact.
But is it possible there’s a silver lining to 2018 that could, in the long run, actually be a net positive? Using some mental gymnastics (which I’m quite good at), I think the answer may actually be yes.
By now most of you are probably aware that this is the last week that Dow Theory Letters will be published. If you haven't had a chance to read the message that was sent out this morning, you can read it here (link no longer active), on the announcements section of the website.
Since this is the last time that you'll hear from me via DTL, I thought I would take a moment to say some goodbyes, reminisce a bit, and let you know what I'll be up to in case you'd like to continue following my work.
The unfortunate reality is that nothing in this world is certain. In fact, the only thing in life that is certain ... is that nothing is certain. This is especially true when we talk about money and investing. Since we can't deal with certainties, we're forced to deal with probabilities. Therefore, probabilities become the lens through which we must view all things investment related.