Fading the Media

Barbara often reminds me to keep it simple.

One simple principle to keep in mind is that the big money is made by fading or going against headline coverage of the market. By the time a story is picked up by the media, the market's advance is old news. More money can be made by doing the opposite of a headline story in the daily newspaper. For example, the local San Diego newspaper had several bleak stories about the market during the week of August 25. I remember those headlines and I thought to myself that this was a sign that the coast was clear. The storm had passed.

Two days ago, I read an essay on Market Oracle that was very bullish on the market. I slept on it and decided that it was a good time to move into the G Fund. I was being contrary.

Here is a reply that I submitted to the bullish essay posted by Mr. Banister, an active trader, two days ago:

"Dear Readers of the Market Oracle:

I read the articles on this site every day. Market Oracle is absolutely one of the best places around to get a sense of market sentiment.

In this positive spirit, I simply have to say that I became short-term bearish the instant I read Banister's essay. Traders and commentators as varied as R. Earl Hadady, Gary Smith and Nicholas Darvas have all warned that it is too late to be BULLISH when commentators turn BULLISH. The easy money has already been made. Now, if Banister had penned his essay on August 27, 2010, I would have listened and paid rapt attention. (And by the way, I turned BULLISH on August 25, 2010 and made my book for the year in my retirement account/smile. But I digress.)

Investing 101 teaches that media trumpeting of a BULL MARKET is inconsistent with a BULL MARKET. I respect Banister and consider him part of the media coverage of the market. I recall August 25. That morning, there was a newspaper cover story about how dreadful things were in the market. There seemed to be no rational reason to invest. I was afraid of the Hindenburg Omen and the Grand Cardinal Cross. LOL! (Try again, Mr. Crawford.)

I'm just saying that the good money is made by going opposite sentiment in market and media commentary. (See Contrary Opinion by R. Earl Hadady.) Banister's essay made me a BEAR for now. I went to 100% cash yesterday morning.

Thank you, Mr. Banister.

If I had the free time, I would draft a full-length essay because my feelings are strong on the matter of fading media sentiment. If anyone would like to engage me and make the BULL case, go to my blog http://thelasvegastspinvestmentclub.blogspot

Good investing to all!"

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