Reasons are irrelevant. All that matters is that the market responds in the way that it does! Today, despite a Category 3 hurricane in the Gulf of Mexico, oil plunged more than $5/barrel. Does the correct answer to the "why" really matter? Nope!
We all tend to look for reasons that things happen so we can justify our responses. There is something in our psyche that looks for a reason. However, reasons are always given post-event anyway, so by the time we know what caused an event, those reasons are no longer relevant to future market movements anyway. Tomorrow's event will have a different -- and equally irrelevant -- cause!
When we were children, we would always ask our parents, "Why?" "Why this, Mom?" "Why that, Dad?" "Why, why, why?" Eventually, Mom and Dad would tire of our relentless asking and just reply "because". "Because" became the ultimate answer to perennial "why's".
Apparently, there is something in our human psyche that seeks to know the "why" despite the fact that the response to yesterday's "why" doesn't really matter when applied to future events. The reason for tomorrow's market event will be different than the response to today's "why". This is true both individually and collectively (collectively meaning the entire market). The answer is simply, "because". It just IS! The ultimate market answer, just like Mom and Dad's replies, is a vague, but true: "BECAUSE"! That's just the way the market responded! What else matters?!
Apparently, there is something in our human psyche that seeks to know the "why" despite the fact that the response to yesterday's "why" doesn't really matter when applied to future events. The reason for tomorrow's market event will be different than the response to today's "why". This is true both individually and collectively (collectively meaning the entire market). The answer is simply, "because". It just IS! The ultimate market answer, just like Mom and Dad's replies, is a vague, but true: "BECAUSE"! That's just the way the market responded! What else matters?!
Who cares whether the Dow drops 1000 points because Aunt Bodie had a hangover or because Goldman Sachs had a bad quarter? The result is the same -- a 1000 point drop on the Dow.
Do we really need a reason to trade? No! We just use it to justify what we did. "See, the market agrees with me!" But having that justification really doesn't make our trade any better -- or worse. It just helps us to justify taking it! But really, who cares what caused the market to go up or down? The fact is that it just went up or down! And that is all that truly matters!
Do we really need a reason to trade? No! We just use it to justify what we did. "See, the market agrees with me!" But having that justification really doesn't make our trade any better -- or worse. It just helps us to justify taking it! But really, who cares what caused the market to go up or down? The fact is that it just went up or down! And that is all that truly matters!
Who cares WHY it happens? Maybe it happens just because most market participants EXPECT it to happen! That may seem like a dumb reason, but it's the BEST reason. It's the only REAL reason, and the only accurate one. "Because" that's the market sentiment! That's reason enough! More cause or reason beyond that -- is irrelevant!
