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  • Leave Your Logic at the Door

    By Rev Shark
    RealMoney.com Contributor
    4/24/2006 9:19 AM EDT

    Dolendi modus, timendi non item. (To suffering there is a limit; to fearing, none.)

    -- Sir Francis Bacon
    The great mystery of this market is why the indices don't seem to be suffering at all, given the high level of fear over energy prices, consumer spending, interest rates, Iran and numerous other matters. If you want to make a strong, compelling, logical case for why the market is doomed, there is no shortage of arguments. In fact, it seems almost foolish to not embrace some of the negativity, given how obvious it is.

    But the frustrating and intriguing thing about the market is how contrary and illogical it can be. If we attempt to project our fears and hopes and dreams onto the market, there is a great likelihood that we are setting ourselves up for some pain and suffering. The market is simply not a rational beast that worries in the same manner as you and I do. It has a mindset unlike any encountered in the average individual.

    So how do we deal with this? If we can't expect the market to be logical and rational, how can we approach it in an intelligent manner? The first step is to not attempt to impose our own logic on it. If you keep insisting that the market listen to your fears and concerns, you are going to struggle because the market really doesn't care what you may think of fear. Forget trying to impose logic on an illogical beast.

    Once you overcome the natural human inclination to think logically, it becomes much easier to deal with the market. We simply have to respect the action that is in front of us and react to it. If the market doesn't care that oil is at record highs, then neither should we. Maybe the market is just plain stupid, but it is a whole lot stronger than we are, and trying to wrestle it into submission is a guaranteed losing strategy.

    At some point, the worries and concerns that are plaguing many investors will come to matter, but that isn't the case right now. So you have to decide whether you are going to stick to your logical and rational arguments for being negative or embrace the illogic and contrary nature of the market and try to make some money. Logic is nice, but it's profits that put food on the table, and that is going to be my focus.

    We have a flat start to the day. Crude oil has pulled back a bit on some comments from Iran that it would not use oil as a weapon. Asian markets are weak on currency concerns due to the G7 economic meeting. Europe is also weak, as oil and the dollar are providing some pressure.

    There are a huge amount of earnings reports on the agenda this week and that is going to keep things very busy. There should be plenty of good trading opportunities, regardless of the action in the broader indices, so strap into the trading cockpit, put on your goggles, and let's get busy.

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