The insatiable hunger for stories motivates financial media.  At the first hint of a new development the process begins -- hard news, analysis, critics, and long-term effects.  The cycle is so fast that we sometimes get the criticism before most have digested the original news. This is the nature of a highly competitive news environment where everyone wants to get a scoop.  It is completely understandable both for mainstream media and for bloggers who all want to weigh in on the story of the day. Is this a useful time frame for market participants? For traders, the answer might be "yes."  There will be opinions and reactions.  Anyone who can "game" the market reaction may make a point or two in trading profits. For investors, we believe the answer is "no."  The initial, knee-jerk reaction may have nothing to do with the actual investment potential.  ...

There is an ongoing and important debate over U.S. Health Care policy.  Many lives are affected.  The cost of a true solution is high.  There is sharp disagreement over who will pay.  At issue is whether we, as a nation, want to assure some basic level of health care to everyone.  If we do, does this assurance extend to all, perhaps even those in the country illegally? In answering, it is important to realize that we already pay many of these costs.  We do it through expensive, after-the-fact treatment in both emergency rooms and hospitals. Our new President has a plan, but what priority will it get in the face of the economic crisis? For investors there is another aspect to this debate.  Which health care companies will benefit from a new health initiative?  What are the real chances of passage. Each week we ...

In a time of fast-breaking news, a trading system may lag the market.  This is nearly impossible to avoid.  Let us consider the problem more deeply. Characteristics of Trading Systems Trading systems are not news-driven.  Everything important is reflected in data that can be objectively measured.  The best systems, like our own TCA-ETF model, have the following characteristics: There are no specific news inputs; The guiding principle is that any relevant information is reflected by the market; Getting the signal to noise ratio right is very important; It is acceptable to miss the exact turning points in the market. The basic concept is to avoid frequent false starts.  Let the market tell you when there is a big move underway.  Getting on the right side of the big moves is the key to profits. The Current Experience Recent market experience is a real challenge for these system principles.  Over the last ...