The Ignorant Investor

Over the past couple of months I noted that a lot of sectors were overvalued and that I'd stick put some profits I made in some long-term trades into the S&P, simply based on the idea that it hadn't shot up with the other sectors like gold, emerging markets, energy, etc. and so offered a higher probability for returns.

Well, obviously we're in a widespread downward swing in the market, and everything is tanking. But of the "tankees", the S&P 500 has tanked a lot less. It's down only a percent or so for the year, which isn't too bad. Even Intel is up a little today. So I dodged some bullets by staying away from gold, commodities, and the overseas markets. Whether they now offer a more compelling buy is the big question. As always, what happens now is no longer important. The past is dead. It's what's coming down the road in six months or a year that counts.

I don't expect to escape this current bust up unscathed. Nor do I have the kind of cajones needed to move into cash completely in the hope I can time the swing back up when it comes. I honestly don't know what the next six months hold. I anticipate a sideways market for the foreseeable future. Down a lot, up a lot, down a lot. But I don't know any more than anyone else does. So I have to spread the bets across the table.

The gold and commodity bulls are out in droves declaring the power of the long term trend up for precious metals and materials. If I have to hear the line, "In the past, every commodity bull market lasted 15-20 years; we're only in the first few years of this one," one more time, I'm going to punch someone. That's not analysis- that's mechanically looking at a past trend to predict a future one. And if the past set the future, history would end up symmetrical and constant.