I recently read the best market analysis I have seen in a while. It described that the futures market was up limit or nearly up limit on Monday, followed by crashing on Tuesday and giving up all the gains made on Monday. Then, with no change in open interest Wednesday, the following explanation was given: “There doesn't seem to be an easy explanation, as is so often the case in recent years.”
That about sums it up. In today’s market, a tremendous amount of brain cells have been burned up trying to explain that which has no explanation. I don’t know if it is algorithms or millions of decisions that happen so quickly that context and reason are no longer able to be factored in. Or if it is simply a chaotic symphony between the opposing forces of irrational exuberance and unrestrained fear.
It is not that I don’t care or that I am not intrigued by the prospect of solving the riddle. It’s like my dog. I have no idea why she loves us, why she is so loyal or why she wants to work. I’ve learned to just appreciate those facts without knowing why.
The market may not be loyal, it may not have our best interests at heart, it may not even be transparent or accurate, but it is constrained by reality at some point. And while I may not always appreciate its volatility, I am learning to accept it for what it is. Like the mysteries of faith, or marriage to a wonderful woman, it doesn’t fit into a nice, clean box. And I’m OK with that. What choice do I have anyway?