It's time to watch and wait

Come Thursday, we'll see what effect the president's State of the Union address has on the market.

By Jim Van Meerten Jan 26, 2010 3:41PM
This is just a quick note to tell you that I'm sitting on the sidelines right now until after I see how the market reacts on Thursday to the State of the Union address Wednesday evening.

I've learned in the past few years how I can be lulled into a trance because I see market and economic signs that are either positive or negative, so I place my bet on that direction.

Then someone opens his mouth on TV or at a press conference, and I have months of gains wiped out in an instant. Long trades tank or short positions need to be covered because of a short-term, media-generated blip.

I'm not blaming Obama on this; it just happens. Press conferences by Bush, Greenspan, Obama and Bernanke have all caused me to take a hit. I blame no one but other panicky investors.

I do believe that in the long run, the only thing that counts is earnings. My accounting background makes me a fundamentalist at heart. Companies with increasing earnings eventually go up and companies with increasing losses eventually go down.

It's that in-between time that bothers me. The real numbers and the perceived numbers sometimes have a disconnect, and it's during that period of disconnect that people get hurt.

My decision to procrastinate is a decision. I am cutting Factset Research (FDS) from my Wall Street Survivor portfolio. They seem to be having just that disconnect I'm talking about and I don't know why.

Although the numbers and press look good, the stock is taking a hit, so I'm out. I'll think about replacing the funds, but not before I see how the market reacts to the State of the Union address.

Jim Van Meerten is an investor who writes on financial matters here and on Financial Tides. Please leave a comment below or email JimVanMeerten@gmail.com

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