Wrong or Just Early?
Greetings. I am the investment expert who got all the way down to 40% short on Friday just before the market rallied 5% in just two sessions. Yes, I crazily got more defensive when manufacturing flirted with contraction and cracks emerged in the employment picture.
Perhaps I should see the positives in this. Like the Fed now being too scared to raise rates. How foolish of me to not see that it is positive for these seasoned economists to be concerned about the future health of the US economy. Clearly things don't get more positive than that.
YES...THIS IS SARCASM!
I have been investing for over 35 years. Thus, I am keenly aware that the Market Gods love to make fools out of as many investors as possible. And I most certainly am donning a dunce cap right now. However, I also understand there is a difference between being wrong and being early.
Back in late August I got more defensive as I was sure that stocks would retest the lows near 1870. From there stocks climbed all the way to 2020 before finally tumbling towards those lows last week. Gladly my patience paid off. I believe those same forces are in place now in that I am early in assuming a defensive posture but not necessarily wrong to do so.
Some investors state that you can't fight the tape. That momentum rules the day. If true, then positive rallies would last forever, and all pullbacks would push stock prices to zero.
I, on the other hand, believe you can't fight the fundamentals as sooner or later investors have to look them in the face and determine their next steps. If economic weakness continues to show up in more places, then investors will be compelled to get more defensive with lower stock prices as the logical outcome.
