An Amazing Grasp of the Painfully Obvious

In a study apparently conducted by the Consortium for Research on Emotional Intelligence, it was determined that most people conduct their trades based on emotion. Surprise!

The study went further and pointed out that if the person was using a broker, who also suffered from poor emotional control, they would do poorly in the stock market, as well. Surprise!

But, apparently, those same people could do better on their own, although quite poorly overly, if left to their own. The only time the scenario changed is if the person had a broker who exhibited integrity, emotional control, a firm grasp of the market overall (instead of a Henny-Penny-Sky-is-Falling approach), and was capable of directing the client to maintain in a down market or buy at times they would typically be inclined to wait it out. Surprise!

And for all the bluster, study results, published papers, and talking head coverage, it boils down to hiring a broker who has your best interests at heart, is willing to manage their own money the way they want to manage yours, keeps their emotions off the trading floor, and acts with integrity and honesty. No surprise there!

Just For Fun... Let's Follow This Trend...

So, we've determined that we cannot effectively predict the future, but there are things we can do. We can follow trends. That's one great thing technical analysis does--it follows trends. By following trends, we can determine if a stock price is going up or down or saying the same. This is very important if you want to make money in the stock market.

But, before we do this, let's talk about the two kinds of research in the stock market--technical and fundamental research.

Let's Make a Prediction

Want to see predictions at work? Ready? Set. Go!

• Roger Clemens is going to strike out 19 batters during his next game.
• President Bush will admit he's wrong about Iraq and begin troop withdrawal immediately.
• Gas prices will drop to $2 a gallon by December.
• A gallon of milk will cost $5 by January 1, 2009.
• Paul Rivera of Biloxi, CA, will win a million dollars playing the lottery two years from now.

Aren't these the most ridiculous things you've heard in a long time?

Well, it's no more ridiculous than any of the idiotic talking heads on CNBC predicting where the market will go in the future. They have absolutely no idea. None whatsoever. Do not listen to them. They will mislead you--whether by mistake or design. Do not trust them. Nobody can predict the future, especially when it comes to the stock market.