“Distractophilia” is defined as, “One’s obsession with focusing on mostly irrelevant matters, while creating a diversion from what is important.” Ladies and gentlemen, that is exactly what Andrew and I have been writing and talking about for months upon months. The distractophilia list is immense: China, overvaluation, higher interest rates, Russia, yield curve, trade wars, NAFTA, Turkey, and on and on. Meanwhile, the mother’s milk of secular bull markets is earnings, and earnings continue to improve and will likely do so for many quarters to come. Moreover, the stock market is a leading economic indicator and will tell us months in advance what’s in store for the economy going forward.
That reminds us of a quip we have used many times over the past 48 years. To wit: “The market itself determines the relative importance of all factors more accurately than any speculator can hope to interpret them.” So wrote Don Guyon in the seminal book One Way Pockets, the book Merrill Lynch’s legendary retired market strategist Bob Farrell says is the best stock market book ever written! And to be sure, NOTHING has really changed since then, because human nature has not changed. Investors and traders can buy and sell based on their own interpretation of the news events of the day, but the market action itself determines the true and the most accurate interpretation. In other words, if the investor, or trader, isn’t in sync with the stock market, he/she is going to suffer losses! So when the stock market speaks, if you want to make money, you had better listen!
Clearly the stock market has spoken and has been “speaking” since the undercut low of February 9, 2018 (2532 and we were bullish). Since then, the S&P 500 (SPX/2896.74) has gained over 14%!
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