The Ignorant Investor

This morning the government releases an economic report showing that economic growth slowed sharply in the fourth quarter of 2005 to an annual rate of 1.1%, less than half of what economists had predicted. So as of writing, where has this news taken the Dow? Why, up by almost 1%. All signs are pointing to a continued slowdown in the 1st quarter, so the market reacts by going up!

The market reminds me of my cat. Ever notice that sometimes the cat stares at you from the living room floor like it's saying, "Yeah, you thought I was going to jump in your lap to be petted- but guess what? I'm going to go hop on the kitchen table while you're not looking." Why? What's the thinking behind that?

Dogs we understand. Dogs and us humans are running in the same pack. A dog almost never turns down food it's offered, or the chance at a nice pat on the head. I don't know why the market doesn't operate more like a pack of dogs than a housecat; I just chalk that up to one of those mysteries of the universe I'll never understand. But next time you think you know what the market will do the next day, ask yourself whether you can tell what your cat is going to do next. And if you can't even say what a stupid house cat is going to do, how are you going to predict the movement of the Dow?