Zak Mir on less is more
From my perspective it has certainly been a rather interesting past few weeks in terms of my life as a Chartist of the financial markets. I have to admit that my general approach has been to be someone who gives the benefit of the doubt to the upside on stocks, if only because most the time that is where you would expect traders and investors to be pointing their ammo.
Such an approach has of course had its problems in the past. For instance, looking on the bright side of the UK banks over the course of the financial crisis in 2007 – 2008 was hardly a winning thing to do! There was also of course that other rather difficult period for the stock market known as the Dotcom Bubble bursting in 2000 – 2001. Being an optimist at that moment would have meant that you could have been recommending ARM Holdings (ARM) just before a 90% decline in the share price.
Of course, via technical analysis, it is possible to make suggestions of a bullish or bearish nature with equal conviction, and in theory total objectivity. The problem is that if you see in the chart that a bulletin board favourite is about to tank, do you sugar coat the pill, or simply tell it like it is? From what I have discovered (mentioning no names) over recent weeks and months, if you wish to avoid being on the receiving end of the type of treatment reserved in the media for an Operation Yewtree suspect, it is preferable to go with the sugar coating approach.
Does this mean that those who would have been reading your bearish research might save money if their taken heed of the message? Yes, this would sometimes be the case. But do they prefer to not hear bad news and lose money? The answer is also yes. Therefore, in this instance it seems wise simply to give the people what they want.
Giving the people what they want is a theme that leads me neatly into my second issue with the area of research recommendations and information overload. Quality rather than quantity is something which has largely disappeared from our lives in almost every area, from horsemeat in food to reality TV / “Talent” competitions and soaps. I don’t have a problem with many of these issues as I don’t have enough time to watch TV or eat heavily processed food.
But in my area – the financial markets, we have a massive problem with noise and the idea that more is best. It is not, it never has been and it never will be. I will provide you with the example I used at the London Investor Show in February, that of George Soros. He may be punting every day, but he could have been floating on a yacht in the Bahamas for all of 2012 until November when he read that the new Japanese Government wanted to collapse the Yen in order to induce inflation. A swift look at the daily chart would have revealed that around 80 Yen was not a foolish place to buy the Dollar. The result over the next month was a profit to Mr Soros of over $1bn. There was no need to be on an intravenous drip of data from any financial website, Twitter, email alerts or bulletin boards. It was a simple trade. You only need one of those a year or indeed, at a $1bn profit, your life.
My message is to focus on as few situations as possible, preferably ones that come to you, rather than you having to chase them. It is a philosophy I intend to be biased towards in the near future, where less will indeed be more. Indeed, I have no tip in this blog today as nothing has really hit me!
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