Don't Just Do Something. Sit There!

Christian Szell: Is it safe?... Is it safe?
Babe: You're talking to me?
Christian Szell: Is it safe?
Babe: Is what safe?
Christian Szell: Is it safe?
Babe: I don't know what you mean. I can't tell you something's safe or not, unless I know specifically what you're talking about.
Christian Szell: Is it safe?
Babe: Tell me what the "it" refers to.
Christian Szell: Is it safe?
Babe: Yes, it's safe, it's very safe, it's so safe you wouldn't believe it.
Christian Szell: Is it safe?
Babe: No. It's not safe, it's... very dangerous, be careful.

Those words from Marathon Man always chilled me. Laurence Olivier kept asking them again and again as his character -- the sadistic dentist Dr. Christian Szell -- painfully tortured Dustin Hoffman's mouth with a dentist's drill in the 1976 movie.

I am reminded of that film every time we get a big selloff. One of the questions we get each correction is whether or not traders/investors should try to pick market bottoms. The background music is an orchestra of bottom callers, the vast majority of who are, shall we say, premature. Eventually someone gets it right, but I never have been convinced it wasn't a function of random luck.

For the vast majority of Wall Street participants, however, this guessing game tends to be rather expensive. ...