You may have noticed that every time the market dips by 5% or more (as it does a couple of times each year), Wall Street's perma-bears show up with a new chart to prove to you that this time, the world has come to an end, and you need to sell everything and head for the hills. It's a rather extreme thing, if you think about it, since some people inevitably believe them each time they do this, and suffer as a result. For five and a half years now, these prognosticators have been 100% wrong time and time again, and in my mind, this raises a question: what sort of apology should we expect from those who grab our attention with scare tactics and abuse our trust by implying a non-existent predictive significance in the charts they show us?
Well, expect whatever you like, but you'll get neither an apology nor even an acknowledgment that there was an error. Technical analysis uses the same “I didn't really commit to anything language” that fortune tellers have been hiding behind since the dawn of history. Here are the loopholes that keep these folks out of trouble: the meaningless can't be a lie, an unintentional deception can't be a fraud, and a man can hold and express any opinion he wishes. As long as these scare-mongers only imply meaning and espouse a continued belief in their own nonsense, they’re off the legal hook. Whether you choose to let them off the moral hook is your decision.
But as a man can hold and express any opinion he chooses, allow me…
This article: (Think it's bad now? This chart explains why it could get a lot worse) is irresponsible nonsense. This opinion: (This is the most dangerous stock market since 2008) encourages investors to make an incredibly stupid decision that they would regret for the rest of their lives. This article: (Nightmare on Wall Street: Will the market bloodbath continue) is exactly what you would expect from Jeff Macke with this exception – the accompanying chart, labeled “Gacy's Basement Triggered,” accompanied, as it is, by a picture of the serial killer in his clown costume (an apparent effort at wit) is the most revolting thing I've ever seen in one of these revolting stories. No exaggeration, no need to feign offense.
I could urge my readers not to feed the bears by clicking on any such links, and I do, but I'm under no illusion that I can change human nature. All I really can do is make sure the contrary view is heard, and here it is: the S&P 500's average P/E is now a reasonable 18.3, and major Q3 earnings reports, with the exception of retail, are coming in at or above expectations. Also, low oil prices are about to give the US economy a shot of adrenaline to the heart. Investors everywhere, take heed. The value is there, and you don't want to miss what's coming next for the market.
Julian Close has been a business writer since the first day of the twenty-first century, having written for PRA International and the United Nations Department of Peacekeeping. He graduated from Davidson College in 1993 and received a Master of Arts in Teaching from Mary Baldwin College in 2011. He became a stockbroker in 1993, but now works for Fresh Brewed Media and uses his powers only for good. You can see closing trades for all Julian's long and short positions and track his long term performance via twitter: @JulianClose_MIC.