Ignoring short term market movements is a great idea for 2015

Three facts to remind ourselves whenever decisions are to be made about the market (all markets).

1. People and firms whose job it is to trade make much more profit during volatile times
2. The operators of the markets (traders) and their computers have enormous influence if not control over markets (on margin) as they generate massive volumes (without exaggeration).
3. Individual entrants into markets and trading are at an enormous tactical disadvantage.

A lot of commentary surrounded the (brilliant) promotion of Michael Lewis’ articles and books last year, and whether you agree with his observations (as observations not facts) there are clearly issues with the structure of markets for everything traded from commodities and equities to art and collectibles. For 2014 we should also note that most of the hedge funds whose specialized in selective ‘styles’ underperformed not only their own goals, but the markets in general. The trading divisions of the large firms, for many reasons, also performed poorly even without the specter of regulation costs for the future. It was not a good year, probably due to lack of volatility.

This is 2015, and the markets, I believe all markets, have become highly volatile even on a daily basis. We cannot see the details, early on, concerning the performance of ‘those who do markets for a living’ because they are opaque at best and maddeningly complex to research, but it is not a stretch to assume they are doing very well thus far.

If you have to use 2015 markets for your own purposes I have no positive advice. Be very skeptical and find someone who is a professional who you trust…..or take a conservative index fund type path. The way these financial environments work, we will only know what is going on in 2015 in a couple of years, but be very cautious.