Not too long ago, it was very popular to look at the capital markets and ask what they were telling you. As an example if a certain area of the market was rising and no one knew why, many would infer that the market was “telling us” something.
- Interest rates go down… fear or slowdown may be around the corner
- Commodities jump…. here comes inflation
- Gold begins ascending .. Fear
- Aggressive, higher valuation investments begin to move … Things are getting better
- Copper ascends .. this is good .. World is built with copper
Fast forward to today, with more electronics and much more global trade and global participates …
Are market tea leaves readable?
Market Tea Leaves are Still Readable, but Harder
In our opinion, closer attention must be paid to the economic and fundamental factors today. Frequently capital markets and other tea leave indicators many need to be ignored. This is especially important in the “Breaking News” .. World is coming to an end … headline driven market. We see frequent tea leave warnings, that are just not relevant today!
The Tea Leaves do certainly exist but may take a bit more patience to get their true meaning. The afore mentioned electronics, and global participants can frequent and easily be caught off guard, which may lead to a false signal.
As we say frequently, never go “All in our All out” (the subject of another discussion) great allocations, patience and analysis still work even with more subtle Tea Leaves!
John A. Kvale CFA, CFP