The Market Moves to Make It Most Painful for Most Participants

Another day, another positive gain for the markets (as of 11am Chicago time).

It is getting to an almost comical point listening to all the market pundits and expert traders say the "market is overdue for a correction." They've been saying that since early May. Yet, the market clearly has a sense of humor and likes to inflict the most pain against most "prevailing wisdom." It just keeps chugging higher and higher.

The shorts keep providing fuel to push the market higher as they continue to throw their hands up and cover their positions.

If the experts can't pick the direction of the market, what makes me think I can do any better? This is all further validation to me that I have no business predicting which way the market will go. Glad I gave that up to focus on income strategies in the options market that are market neutral. Sure, when the market has a large one-way trend it requires more work on my part to adjust my positions to stay as close to neutral as possible. But there is a liberating feeling in being able to "react" to the market as opposed to attempting to "predict" it. And with the strategies that I practice, I don't have to be right.... I can still be wrong and make money. There is a nice margin for error. See this post for info on my strategy. I've made some minor adjustments to it, but the basic principles are the same.

I have no doubt (but of course I can be wrong) that this market will end its rally with a final blast to the upside which will exhaust all the shorts, and trick the remaining public holdouts into believing its safe to plow their 401(k) back into stocks. And the final insult will be the cautious speculators who have been waiting for a pullback in which to load the boat, but now fear they've missed the ride and scream "let me board!!" and throw all their cash at the high-flying stocks that have already bounced 50% or more off their lows. God help them.

History repeats itself. We've seen this before. If you have been fully invested for a while now, I hope you're being prudent and selling into strength.

Meanwhile, I'll just stay market neutral and adjust when necessary, and not stress too much whichever direction the stock market decides to head.

Now off on a bike ride to Northwestern University. Its a beautiful fall day here in Chicago. I'm gonna go read a book by the water on campus and try to obtain the knowledge of Kellogg MBA students via osmosis.