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Rule #6: Don't fight the FED (less valid than #1).

November 4, 2022

The lengths that grown adults will go to justify their reckless behavior continues impress.

One of the classic misnomers that you'll hear out there, especially these days, is: "Don't Fight The Fed"

How many times do you hear these fools say it?

They think they sound smart. They think they're clever.

They pretend to be historians, but all they're proving is that they're lazy, wrong and enjoy embarrassing themselves in front of everyone.

If you're going to quote the great Marty Zweig, the least you can do is quote him correctly.

I mean, when you sing that CCR song, do you also say, "There's a bathroom on the right?"'

You can't be serious.

The "Don't fight the Fed" charlatans are some of the worst offenders out there.

They literally lie to people about not fighting feds as an excuse for losing money by ignoring price behavior.

To be clear, the actual Marty Zweig quote is:

"Rule #6: Don't fight the FED (less valid than #1)"

The people who are lying to you conveniently like to leave that last part out.

Don't ever forget to identify motivations, especially for the ones with the biggest microphones. Are they investors? Or are they characters on television, or Twitter people, or economists, or sell-side analysts?

What is their job? To gossip? Or to profit from public markets?

If you're like us, and you're ONLY an investor so you can make some money, then we want to LEARN from our predecessors, not misquote them to make ourselves feel better for being bad at investing.

So shouldn't we listen to Mr. Zweig and refer to Rule #1, considering it's more valid than Rule #6?

I obviously think so.

"Rule #1: The trend is your friend, don't fight the tape"

So then that's what we do. We follow rule #1, just like Marty told us to over 30 years ago.

Again, by definition, this one is MORE valid than Rule #6.

Here's a copy of his list of rules from a meeting held at the Market Technicians Association in 1990, which is what they called the CMT Association back then:

This is a great list of rules. It's one of the best ever probably.

There are a lot of different points here that we can elaborate on.

But my focus in today's note is to reiterate that our goals are not to misquote legends in order to justify our miserable existence.

We're only here to profit.

So we do the very simple 3rd grade arithmetic. And as it turns out, the trend for a large majority of stocks since the second quarter has been UP. And at the very least, it hasn't been down.

Just because you may have too much Tech exposure, or some con artist convinced you that the Nasdaq is the stock market, doesn't mean that the majority of stocks haven't been going up since the summer lows.

Prior to that, from February 2021 until this summer, the trends had been down. (You could also argue that since May 2021 stocks had been trending down. Either answer is acceptable).

So if a majority of stocks start to fall again (they have not), then I have no problem focusing more on shorting opportunities.

But owning the strongest names keeps working. Why would we fight that?

Marty Zweig told us that rule 1 is the trend is our friend and to not fight the tape.

So if you are "not fighting the fed," but you're fighting the tape, you are contradicting the exact quote that you're trying to use to pretend you're smart.

Doesn't that then make you sound stupid?

If you’re gonna quote a legend, at least get the quote right.

Like Nas said in Ether, "Whyn't you let the late, great veteran live"

Grow up.

Cut the crap.

Stop saying stupid shit.

And focus on the only thing that pays anyone: Price.

It's Rule #1 for a reason, not all the way down at #6 with a Barry Bonds asterisk on it...

Tell me I'm wrong.

I dare you.

- JC

 

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