05/20/11 The Waiting Game

The II and AAII sentiment survey results surprised me this week- I didn't sense the excessive bearishness being reported.

Two of Hulbert's commentaries weigh in on the discrepancy.

http://www.marketwatch.com/video/asset/battle-of-the-sentiment-indicators-2011-05-19/D33E4DCC-2501-4382-AEDD-24DB0475C67E#!D33E4DCC-2501-4382-AEDD-24DB0475C67E

http://www.marketwatch.com/story/how-optimistic-is-the-stock-market-really-2011-05-20

Do we correct? Has the market topped? I don't know. But I've moved on to a different game, the kind that takes timing strategies to the shredder.

Timing worked for awhile, but it's never been my game. It's difficult to recall now, but prior to 2006 I rarely engaged in day trading- it was (and still is) a well-known fact that most day traders (and most gamblers) lose money.

So we now likely revert to the norm:

(a) In the course of a year, the bulk of stock market moves will be concentrated in some fraction of the total number of trading days. Typically a small fraction. Do I want to be the guy that hopes he's all-in on days when the market spikes up (worse, gaps up), and in cash the rest of the time?

(b) The way to make money in the market is to buy low and sell high. Buy quality companies when they're out of favor, then sell them at high multiples of price-to-earnings? That's a pretty simple buy low/sell high strategy.

Day traders burn out or fade away. I know I'm on the edge of burn-out. Investors make money more consistently.