Timing the market or Forecasting the market (zt)

Looks like many people here love to timing the market. However, many are actually doing the forecasting not timing. Because most are simply not listening to it, but use these reasons or those reasons to determine what market should do.

But market doesn't care what they think market should do. It just does what it wants. Those who listen to market action itself win ahead. Those who keep forecasting will continue to lose big.

My suggestion is to stop forecasting what market would do, but listening to what it does.

Before this power rally recently, there were clear signs. On Feb 5th, market sold off in the morning but rallied to close near the high. Most puts holders sold their puts that afternoon (Even CNBC told you that). That marked the bottom of this correction. On Feb 26th, market opened sharply lower on FED's unusual move but once again closed higher. Many commodity related stocks had big reversals on the day against strong US$. Two session later, Nasdaq had a follow through day. Rally continues.

Any person who listened to any of these signals would know that it is stupid to short. However, those who keep forecasting based on economy thoughts keep losing money (stock and economy are too different animals).

If you are very frustrated about the market recently, go ahead and ask yourself what went wrong? Is the market always right? or Is your forecasting always right?

Following is what I borrowed from a good article:

"Old Joe Granville always said the market tells its own story. All you have to do is read what it is saying. Unfortunately for him, he didn’t take his own advice.

Joe Granville was one of the pioneers of technical analysis. He used several novel methods of "reading the market." The most popular of which is On Balance Volume.

Initially, he was quite successful, and became the market "Guru" of the early 1980’s. He was so influential that his forecasts became selffulfilling prophecies. Then he missed the call on the greatest Bull market of all time. On August 16, 1982, the market broke out of a steep slump, and Joe Granville said it was a folly. He said that it was a Bull trap, rising stock prices were like balloons that were about to burst. He remained a Bear for over 14 years while the market soared. What went wrong?

Mr. Granville’s fatal error is that he went from timing the market to forecasting it. There is an enormous difference between the two. Market timers study indicators of market activity to determine whether it is rising or falling. Forecasters consider economic factors, and whatever else they think is important to predict what the market will do. Market timers need never fail. All forecasters will fail eventually.

Forecasting the market is theoretically far more powerful than timing. Everyone would like to know what the market is going to do, when it will happen and by how much. In the real world, however, nobody has a crystal ball. Forecasting deals with the unknown, and eventual error is certain. The landscape is full of forecasters who have gone wrong. Their stories are well documented, and they were viewed as stars when they were right. Now they are viewed as losers. Joe Granville? He just happened to be the most flamboyant of the bunch. Recently, he too has turned Bullish. Maybe that’s something to worry about."