Why don’t we say, “The Market Went Down Too Fast?”, Rather than Up Too Fast?

All right, I know what I remember from the internships with brokerage houses the old adage that "If it goes up too fast, then you should sell." The general rule of thumb was if it goes up 20% in less than 6 months sell. by that logic you should be selling, but the antithesis is far more accurate than the old adage.

The market went down too fast, it hasn't gone up that fast. The point I'm making is that the market should never have reached around 666 on the S&P500 Index. It was pure panic selling that caused the market to go down to that level where negative annualized rates of growth were being priced in. The talking heads that are now short and have been since July of 2007 are merely talking their book to try and get the market to go irrationally lower once more. They are using the old adage that the market came up too far, too fast as justification for why we are going lower. This has no applicability in the current market because the fact is the market went down too fast. That means that it is all right to be buying for the long term even at today's levels, and I warn you that if you wait for us to drift back to 666 on the S&P, I don't think you'll ever get your opportunity to buy in, and will be left either in appreciating short positions or in cash if you haven't taken a position yet with current money market rates lagging the rate of inflation.

There's very reasonable fundamental value in the market right now, and certainly there's no reason for it to be going down. I did post on elitetrader.com under the name bwolinsky that I thought we'd see a little pullback possibly to 87 on the SPY ETF, but I happen to think that will be one of the last pullbacks you'll see before we go to around 1000 on the S&P index.

To summarize, while I can appreciate the wisdom of taking profits because of the old adage "it went up too far, too fast", you have to put in context. This measure of profit taking strategy I believe was first brought up because brokers had to make money by churning client accounts. Of course anyone who is short is going to provide reasons why we should head lower, but don't be fooled by this one, as it does not apply in today's market, because we went down too far, too fast, not up.