Posted by: jhamon | August 12, 2009

What will the market do next? “I really don’t know and I really don’t care.”

A great read from Barron’s (HT: Chris H) regarding Aref Karim’s excellent global trend program got me thinking.  A brief excerpt:

“Our sentiments toward the market conditions are agnostic,” explains the 56-year-old Karim, a chartered accountant who worked in the alternative-investment department of the world’s biggest sovereign wealth fund, the Abu Dhabi Investment Authority, from 1982 until 1995. “The key to our performance is an investment program that searches for upside volatility while limiting exposure to markets that are trendless or fluctuating lower.” And while his aim is always to be in the markets, Karim has no problem building up cash when opportunities are not clear.

People frequently seek my professional market opinion with some variant of “What do you think the market/this stock is going to do next?”  I typically respond: “I really don’t know and I really don’t care.” 

I am certain that many people think I am being deliberately obscure or worse.  But in reality, I am expressing the very viewpoint Mr. Karim holds with different (albeit less politic) words.  (Might need to work on that, actually… “our sentiments are agnostic” is less confrontational I think, though still vaguely oracular.  Thoughts, anybody?)

For a long time, I had a sign on my office door with this quote by the Nobel laureate Danish physicist Niels Bohr“Prediction is very difficult, especially about the future.” 

Only madmen and prophets know the future; we are neither of those. 

At FractalBox, we have learned that predictions and opinions are a great impediment to trading success.  It’s far better to deal with what the market is telling you right now.

Moreover, while humans can design exquisite machines, they cannot readily behave as exquisite machines.  Therefore we put all our work into the design of our processes and then allow the processes to operate. 

See our 10-Point Stock Trading Manifesto for more on the thinking that drives our strategies.

Click here to receive Outside The Box by email.

 

Advertisements

Responses

  1. Great to be out side of the box.

    • Thanks Donna… great to have you!


Leave a Reply

Fill in your details below or click an icon to log in:

WordPress.com Logo

You are commenting using your WordPress.com account. Log Out / Change )

Twitter picture

You are commenting using your Twitter account. Log Out / Change )

Facebook photo

You are commenting using your Facebook account. Log Out / Change )

Google+ photo

You are commenting using your Google+ account. Log Out / Change )

Connecting to %s

Categories

%d bloggers like this: