Mr. Market is a tricky devil. Or is he a manic depressive, as Ben Graham suggested all those years ago? Whatever the appropriate psychological label, you’ve got to stay alert in the money game when he’s your opponent. You’ve also need to remain willing to act when he drops something more than subtle hints about the future.
That’s not always obvious when your perspective is the past month, or even the trailing 12 months. A short-sighted view of the recent past is the main temptation, though. The world is awash in tactical observation. Reaching for a bit more strategic context, on the other hand, seems perennially unpopular, or at least underestimated.
That’s a mistake, of course, since stepping back and looking at the big picture throws us a strategic bone every now and again. Don’t misunderstand: tactical analysis is helpful, even essential. We do a fair amount of it, in fact. But using it in isolation, without the benefit of strategic review, is like driving with a loose wheel: It’ll work for a time, but it’s going to get you into trouble eventually.