Educational use only. Never intended as advice. Do I look like a fortune-teller?

"A visitor to Scotland surveyed a vast flock of sheep and said to the shepherd, 'if I can tell you how many are in your charge, can I have one?' The shepherd replied, 'sure, you can't guess'. The visitor scanned for about thirty seconds and opined, '7768'. 'That's amazing', answered the shepherd, 'pick one'. The tourist walked over and quickly grabbed a sheep. The shepherd asked, 'if I can guess your profession, can I get my sheep back?' His visitor nodded in assent. 'It's easy, you're a Wall Street analyst'. His guest couldn't believe it. 'How could you guess?' The shepherd grinned, 'you had 7768 sheep to choose from, and you picked the worst one.'

Financial journalism often tends to parallel the quality of Wall Street analysis. If the market goes up, then we hear mindless mumbojumbo about 'productivity surge boosts market' or 'oil price decline boosts market' or 'bulls ride strong economy to Profitville'. But if the market declines, we read 'consumer worries shake stocks', 'energy prices rile market', 'profit-taking leads to pullback', or 'buyers strike as XYZ disappoints'.

Would that simple truths explained complex crowd behavior. The old adage about 'short-term the market is a voting machine and long-term it is a weighing machine' answers part of the riddle. The interplay of fundamentals, asset allocation trends, sentiment, and technicals all contribute in peculiar ways to asset pricing. Mathematical modelling, led by researchers like Scott Reamer, using the intersection of numerous (unknown to me) tools, comes closer to the truth. But claims by the Batman on CNBC, or AbbyNormal at Goldilocks Sacks, or Henry BudgetWhacker are only commercials, the inevitable stuff of carnival barkers enticing the uninitiated into their circus tent.

There are a raft of places on the internet to get good financial data and information. Richard Russell at www.dowtheoryletters.com stands apart. Bill Cara at www.billcara.com is fantastic, as is www.thekirkreport.com, www.tradermike.net, and of course, the good people at www.minyanville.com for comprehensive market coverage. Michael Santoli at Barrons rocks. John Hussman at www.hussman.net is fantastic. Read anything you can from Jeremy Grantham and Marc Faber. But believe what you study and see, not the reflexive pablum of the pundits. They are not there to help you.

You don't have to be bearish to be honest. But if you are selling something, are you more likely to be honest about your wares? Caveat Emptor.


Volatility bands for today.