Markets Throw Off A Buy Signal

I realize that this may be somewhat confusing given the overriding issues with the economy, the Euro-Zone, the upcoming political debate on raising the debt ceiling and upcoming pressures to corporate profit margins...but the S&P 500 registered a "buy" signal last week.  In this past weekend's newsletter (click here for free email delivery ) we stated that "...politics and economics make very poor bedfellows when it comes to portfolio management. As investors we must respond to market action rather than emotional biases. In the famous words of J.M. Keynes; 'The markets can remain irrational longer than you can remain solvent.'"

Our investment discipline is driven by technical and fundamental analysis – while fundamentals tell us "what" to buy; technical analysis tells us "when" to buy.  Think about a game of poker - if we bet "all in" every single hand we are going to wind up broke - quick.  However, if we "size" our bets relative to the "risk" of loss on each hand, we can in turn be fairly successful at the game. 

Just like playing a game of poker - when managing a portfolio emotional biases can damaging.  Every day investors are bombarded with information which tugs at emotional biases.  However, emotional biases are what cause investors to continually make poor investment decisions from buying at the top of the market to selling at the bottom.  If you ever wondered what separates really great investors from everyone else; you will find that they all lived ...