Caught this from Erik Swarts:
“As someone who is constantly wrestling with the stream of information that delineates and frames the market from a day to week to year perspective – I have to constantly be asking myself, “What could go wrong with my own interpretations?” Where are the pressure points – the likely variables in my logic? I am bullish towards equities over the next 2 to 3 years, yet I am cautiously pessimistic in the near term. What would render that perspective wrong? Two words – the dollar. If the dollar continues to fall through downside resistance – all bets are off and my near term bearish market calls would in hindsight be flawed – because I failed to estimate the velocity and downside momentum of the US dollar. Commodities would reboot and equities would likely follow suit for a spell. The market would eventually turn, but my timing would have been off – therefore wrong. In trading, there is really no such thing as vindication down the road. If you are too early – you are still just as wrong. The window grows ever narrower by the day. As an economist, you could always say six months or a year from now, “See – I told you so”. But it’s irrelevant to managing money. It’s an academic exercise. Economists are an important part of the synthesis of information traders absorb – but they are typically the weak link in how impressionable individual investors and traders interpret the market. In my opinion, the greatest economists in the world are typically the best traders. They will tell you with great precision what is likely coming around the bend and how it will influence the market six steps away. They just would never call themselves an economist. For one thing it would be a serious downgrade on the pay scale. Sorry guys, it’s just the brutal truth.
Answer to his main question? Everything.
The problem with fundamentals…
