The MoneyMan Speaks to Me: The Shape of the Market

what happens when "the wave" starts at a ball game?

at the beginning, everyone's really into it...you watch it going around, anticipating the right time to stand up, throw your hands in the air with reckless abandonment, and come back down in a gradual motion as to ensure the perpetuality does not lose its novelty before it comes around to you again. Yes, it gives you a sense of accomplishment, instant success--exhilaration for the moment . . . to be an integral part of a moving organism, THE WAVE. Big fun at ball games, but not so much in the game of investing.

the moneyman warns us of becoming a part of the herd. (that was completely an unintentional plug for his book--Escape from the Herd 2006)

To be a good investor means to recognize the pattern of how things work in the market--to understand where it is, where it's been, and where it's going. . . .seems too easy to be true.

Dan says that viewing the market as a series of waves on a daily basis, going up and down is a tragic mistake that many people make. Stock charts, money market watches bombarding our visual senses with an array of colors---seems like in every business section of any given newspaper or business journal , you can inevitably find a chart of some sort, predicting this or reporting the history of that---but they all look the same. . . Hills and valleys.

Pretty picture, huh?

That is exactly what people like to see . . . a pretty picture, one that shows them that if they are down, an eventual high is to be expected soon, very very soon . . . can we stay afloat in an ocean of waves forever? Do we not fear that shoreline in the distant?

My eyes have just been opened a little wider by my dear MoneyMan.

While these charts are pretty to look at and may very well be informational and helpful in one way or another, they don't show you the big picture, or even close to the whole picture—but isn't that what we want to see? Haven't we always been told that a smart man takes a step back to see things from a different perspective?

Dan says a smarter man takes a few steps back and looks at the whole picture from the left side, right side, underneath and 100 miles away--even 10,000 miles away.

Money makes the world go round, right? According to Dan, that is precisely the "whole picture." He sees the state of the market as being cyclical rather than a series of waves. Don't ride those waves with it's ups and downs . . . be proactive, analyze and predict. If the market is cyclical, then at any point on that circle, there is a complete 180 from that point--look directly across, not two steps in front of you.

Tune into BizRadio 1320AM Houston & 1360AM D/FW to hear more of what my MoneyMan thinks. . . in the meantime, enjoy your 7th inning stretch and pay attention to the shape the wave actually takes ;)