There is never a time in the market when you are unable to find very intelligent and logical arguments about what is going to happen next. Disagreement is what creates a market but there is a tendency to believe that those that disagree with you are missing something that is very obvious to us. There is always someone on the other side of our trades and they aren't buying when we are selling simply because they are stupid.
Recently the debate over whether we are close to a major market top has been building. The calls for a major reversal have been growing louder and the list of negative arguments longer and more aggressive.
The argument that problems lie ahead is compelling but the issue is what do we do?
Do we simply embrace the negative arguments, sell everything and wait for the inevitable crash? Many pessimists have done that at various times in the last decade and they paid a very high price in missed opportunities.
My view has always been that you cannot time the market with arguments. You can only time the market based on the price action. Price is always the final arbiter and if you are not in tune with how it moves then you won't be successful no matter what arguments you might make.
Market pundits like to pretend that they have great predictive abilities. Bold predictions attract attention and that is the name of the game for many in the investment business. The truth is that no one --and I mean not a single soul -- have ever called the twists and turns in the market with a high degree of precision.
The way to navigate isn't to predict but to react to changing conditions. Give up the fantasy that you know what is going to happen at some point in the future and focus instead on what is happening right in front of your face right now. That will allow you to react in a far more timely way than concocting a theory and then hoping that others will embrace it at a specific point in time.
The best thing most traders can do is admit the futility of most market predictions. That behavior blinds you to current opportunities and will cause inefficient use of your capital.
Great traders prosper by managing trades with great discipline. Predictions are more entertaining and tend to sound very intelligent but it is the price action that tells the truth.