The Iconoclast Investor

Bailout, bailout, bailout … it’s all bailout all the time these days, with every news organization (financial or otherwise) reporting rumors and innuendos from every politician regarding the government’s bailout package.  Of course, the plan hit the fan in the House of Representatives on Monday afternoon, though the Senate passed it on Wednesday night. The House is expected to vote again today.

What’s my take on the situation?  Honestly, I don’t know.  I want to believe that some type of bailout is going to help stem the tide of this mortgage mess, and I would guess it will.  But I also note that the Dow was down 250 points at midday, before the bailout vote failed on Monday–so it’s not as though investors were overjoyed about the package to begin with.

In these situations, I try to separate my emotions about this situation (which everybody has) from my investing decisions.  When it comes to the stock market, it’s usually best not to try to always understand WHY something is happening.  Of course, it’s natural to want to understand and know “why.”  But the funny thing is that those people always looking for answers often miss the market’s signals.

Thus, politically and personally, do whatever you want.  Write your representative and senator.  Talk with the family about the issue, or try to convince friends of your point of view.  Or simply watch cable news shows all night and fill up on the opinions your of favorite commentators.  All of that is fine and dandy.

But when it comes to making money in the stock market–our goal in this advisory, and in our various newsletters–you should keep your attention squarely on the market’s trend, and the action of potential leading stocks.  The market, as they say, tells its own story best.  Right now, that means playing defense, but it also means being prepared for the next bull market, something I’m reminded of when I think about the story I detail below.