Say it Ain't So

OK, I admit it, I'm going to miss Amanda when she ships back out to Sydney. Despite that recent admission that she is indeed a "Men At Work" fan.

Who among us does not appreciate songs that mention vegamite sandwiches?

Anyway, they had some Charles Schwab guy on earlier with tips for investors in these times of high volatility. Color me skeptical on the premise alone as it's hard to define a world with a 25 VIX as anything extraordinary. But lo and behold, some good tips. I'll paraphrase the one's I picked up.

1) Trade smaller
2) Use ETF's.
3) Trade with the trend.
4) f*** the Fundamentals
4) If in doubt, wait it out.
5) Don't try to pick bottoms, follow the trend.
6) Place stop orders considering and understanding volatility, not price.

The general thoughts do make sense. Volatility effectively increases the size of any given position, so important to account for that. And to widen stops and targets as the the magnitude of "noise" is now larger.

As to the "trend following" thoughts, easier said than done. Yes, it probabably behooves us to swing trade off the short side until proven wrong. But try doing that at home, not so simple, you always get squeezes out of nowhere in these environments that really whip the shorts.

As to using ETF's, we all have a tendency to simplify in tougher times. And ETF's of course are the ultimate simplification tool. Not sure there's anything necessarily wrong with that, it's pretty easy to move into and out of them.

And bottom catching, yes, that will bankrupt you. What Rev. Shark said after Tuesday's "important" bottom.

Of course, as soon as we bounced, we had the inevitable rush to declare that the worst is over and the bottom is in. Many on Wall Street love to play that game, but the real question you need to ask is whether they are helping you make money. Have they helped you navigate the market successfully with these timing calls? How many times have they made incorrect bottom calls already? Do you jump in and out with each one of these flamboyant predictions? Is that really a good market approach?