What’s an Investor To Do?

tea leavesThe Wall Street Journal’s Headlines earlier this week read like a treatise on malfeasance but with a good ending. What do we mean? Take a look at these highlights:

  1. SAC Capital will plead guilty to securities fraud.
  2. A multi-billion dollar settlement between J.P. Morgan and the US over soured mortgage bonds is at risk.
  3. Rabobank agreed to pay $1.07 billion to settle accusations that it skewed financial benchmarks and its CEO quit.
  4. UBS and Deutsche Bank confirmed involvement in a probe into a possible foreign exchange manipulation.

Is it as bad as it looks?

The times look bad, right? Major sentinels and keepers of our financial system appear to be fessing up to going rogue. But wait! Let’s read the next highlight- The Dow Jones Indusatrials climbed to a record 15680.35 as investors were encouraged by corporate and economic signals.The keywords here are ‘encouraged’ and ‘signals’. The market responds to signals and acts if they feel the signals are good. Life on the Street is all about catching a trend before it becomes a trend. So computers, data scouts and pundits all have their ear to the proverbial ground to eke out an edge. That means yesterdays news has already been digested, synthesized, regurgitated and factored in. So, all that bad news about banks running afoul of the regulations? Already taken into account when the early signals manifested!Some advice if you’re trying to invest in the market: You need to build your own crystal ball and smoke signal catcher and develop your own system for reading the teal leaves. Otherwise even the bull will trample you on its way to the bank.

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