Devoted to understanding the basics and fundamentals of investing

Pardon me for saying this about market experts who write for-a-fee advisory newsletters: They are all like assholes; they are everywhere and most of them stink. Recall the gold markets when gold was $800 an ounce? I vividly recall the market "experts" predicting $3000/ounce gold (or even more)! Not one expert was publicly predicting a decline to $300. I was not trading gold back then, but I was charting selected commodities, including gold, and I charted the excessive runup. Based upon the chart results alone, it certainly appeared to a non-expert like me that it had to crash eventually. It was just a question of time as to when. I was so impressed about the euphoric predicitions of $3000 gold that I began to suspect the experts of intentional disinformation. Over the years since then, my observations of key market letter advisories has led me to adopt a very basic rule: IGNORE EXPERT OPINION unless it has carefully be verified over a long period of time from a specific expert source which has proven to be reliable. At major market highs, the experts are ALWAYS predicting a higher high. Do you remember that just before the crash of '87? Experts were predicting a 3000 DJIA. Remember Joe Granville saying to sell everything, to sell short everything, just as the market took off like a scalded dog to leave the DJIA 1000 forever as an historical memory? At major market lows, you will find just as many experts ALWAYS predicting lower lows! In fact, at any given time or in any given year, the market experts can be found in three basic varieties: (1) Gloom & Doom,
(2) Neutral, and (3) Euphoric. Take your pick. Remember, you are paying out good money for expert market letters. In fact, the situation is so hopeless that a popular new indicator measures advisory service sentiment: When a majority of the experts think that the market is going down, it is a signal that the reverse will occur! Similar measurements of Mutual Fund cash reserves has shown that mutual fund managers are consistently wrong at major market turning points, holding their major cash positions at major market lows. Even worse, at any given time, there are always conflicting expert opinions. In the rare instance when they all agree, studies have shown that they are usually wrong. What chance do we have under circumstances like that? I remember that in 1988 a market expert said the market had to plunge very soon because market breadth was so terrible. I almost fell out of my chair, because market breadth was utterly fantastic, as measured by weekly breadth (the advance/decline line). It turned out that this "expert" was measuring daily breadth, which is just plain noise, in my opinion. Unfortunately, he did not explain that his position was short-sighted and mainly for use by a day-trader. The so-called "experts" can't even agree upon what technical or economic conditions constitute a bull or a bear market.

Having said all that, there are a number of market advisory services available which offer advice, and make buy and sell recommendations. Most also offer market timing advice. These services probably fulfill a necessary need by providing some additional insight into the markets, besides that of the vocal, self-appointed "experts" and the usual news media hype. These advisory services offer some good advice
at times, and their cost is generally well worth their unique outlooks. I like to take a different subscription each year, to expose myself to conflicting viewpoints and new outlooks.

I HIGHLY recommend that you read one or more of the books written by Richard Ney. I may think he goes overboard sometimes, but my trading experience has proved many of his theories to be right on target. I'm not going to attempt to provide a summary of his fine books in this blog, but I have already related to at least a few of his theories in my response and comments to other subject matter in this blog. (All credit for any consistency of positive results to my own prior trading experience should probably go directly to Richard Ney).

DON'T BELIEVE EVERYTHING YOU READ
=================================
Back when I was a freshman at Columbia University (early 1960's) one of my teachers was a guy named Leon Levy who, for many years, had been one of the most successful people on Wall Street. Mr. Levy taught the course I attended three times a week at 8:00 A.M., and then would duck out to go play the stock market. He was one of the founders of Oppenheimer (brokerage firm) and eventually went on to run a company called Odyssey Partners. Mr. Levy knew everything there was to know about the way the stock market works, whereas the school's full-time academics with Ph.D.'s knew very little. At the time, Louis Wolfson was a prominent financier and on the board of directors of what was then American Motors Corp. This was one of Mr. Levy's favorite stocks back then, and a number of us in his class had a position in it. On the way to school one morning, I noticed a front-page story in the New York Times to the effect that Wolfson had announced that he had disposed of half his holdings in American Motors and would soon sell the other half. This story provided the main lesson of the day for me. Mr. Levy admitted that he didn't know the details, but said that no one would tell you in advance that he or she was going to sell a large amount of stock and then compete with you on the sell side. He told us that whenever we saw a story in a national magazine or newspaper like this about a stock, we should assume that it was placed there to make us do the wrong thing. He said that if you read somewhere that someone likes a particular stock, then that person already has bought all of that stock which he or she wants to own and is now really buying something else. Prior to the appearance of the Times's news item, American Motors stock had risen from around $6 or $7 bucks per share to about $12 or so (as I remember) and the report caused a brief dip in the stock, but it soon resumed its uptrend. Another week or so later, another story alleged that Wolfson had sold not only half of his stock position, but all of it, and had illegally gone short with it! Short sellers sell stock that they don't own in the hope of buying it back later at a lower price. As I recall, a judge obtained an injunction against Wolfson covering his short sale, and this news was enough to shoot the stock back up from the $18 per share level, where it was when the second news story appeared, to about $27 in a VERY short length of time. Of course, the stock eventually went up to something like $96 per share, and Wolfson went up to jail! Mr. Levy also said that while you can't always believe what you read, you can often believe what you see -- and that is certainly true today.