Who is right; The Bulls or the Bears?

This is an article posted by a good friend, colleague, and mentor, Don Dreyer, who consistently finds himself in the top fraction of a percent in every major online investing contest. When he talks about stock ideas and money management it is a good idea to listen.


Who's Right?
Posted Mon Nov 05, 06:31 pm ET

There are so many experts and opinions in the market, how can you tell who is right? Only the market is right all the time. Any and all opinions need to be checked against the price action. Price must confirm the analysis. If it doesn't, then it is time to go back to the drawing board. This may mean you need to abandon your own elaborately formed opinion on the current state of market or where you think it is going.

No prediction is as valuable as being able to know what to do with what is. When you look at the current price of a stock, do you know whether to buy, hold, sell or sell short? Do you know what to do when that price goes up or down from this point? It doesn't matter what you believe a stock is going to do; you have no control. What you do have control over is what action you will take when the stock moves in the direction you expected or in the opposite direction.

To make money in the market, you need good opportunities. Next, you need to be able to recognize an opportunity when it presents itself, whether that comes from a so-called expert or from your own analysis. You then have to have the conviction to seize the opportunity. More important still is that the market must confirm and validate that you have truly seized an opportunity. If you get confirmation, ride the winner and enjoy the profits. If the market emphatically proves you or the expert market analyst wrong, then change your mind because the market isn't going to change for you or the "expert."

Don't spend time trying to guess who is right in the stock market. Focus rather on aligning yourself with the market because the market is the only one that is right all of the time. Seek to get better at listening to the message of the market instead of the endless opinions all around you. Learning how to take action under every circumstance is far more important than guessing which way the market will wiggle next.