How not to lose Money in Speculation Tides

The markets always rely on data, hopes, hopelessness, desperation, fear, greed to deciding direction. But the game-changer is when governmental institutions chip in with some announcement and change the course of the markets. 

The markets really got jitters when Dallas Federal Reserve President Richard Fisher said central banks may not have enough firepower left in them to trigger another growth cycle.

A few hours before that, almost at the dead of the Indian night, gold climbed on speculation that central banks may take steps to bolster their respective economies.

But the gold rally was limited after the same Richard Fisher said adequate economic stimulus already is in place. Of course, he was mentioning two different things in two different contexts and was giving clear signals. And occurrences of this genre should be expected from time to time.

So how would one weather these statement-induced market fluctuations? Simple, rely on data when it comes to arriving at a trend. After all, that is how institutional investors make money. For example, oil dropped from the highest close in two months when data came out that demand is dampened in US.

The trends based on these kind of data are much more reliable when it comes to deciding the market direction; rather than statements that mark empty speculation and unfounded optimism. Via

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