If you don’t like getting whipsawed by market reactions to the Fed, don’t participate in it. Ridiculous assumption - right? I can understand that most investors believe it is impossible to avoid and that is true - as long as you let it. Our market has been conditioned by the media and the focus on short term trading to pay attention to everything involving Bernanke and his crew. Economic reports have one focus - to determine what they mean for likely Fed action. With each release we have speculation leading up to the report and traders placing bets that fit with their position. Then we have the reaction to the report and unwinding of the previous speculation or adding to the position or taking profits. Next up they analyze the effects on Fed Funds Futures which as I keep saying are useless and dangerous measures of this absurdity. Of course, if you must speculate about the Fed then Fed Funds Futures seem like an indispensable part of the puzzle. I know the media keeps reporting on it and making it seem like it’s important and it is. It is critical to the continuation of their focus on trading and speculation. It’s great for volatility. It’s great for program trades. It’s great for exciting tv. But this is not great for investing.

Just look at the past few weeks since the Fed stopped the slide and gave us a rally. Was that investing? How many positions were put on after Thanksgiving that came off real quickly yesterday afternoon? And then again this morning with the “unprecedented” coordination between Central Banks - was that an investable moment? How long did it last? This market is not about investing, it’s about speculation on the Fed intervention and with any speculative endeavour, you have to deal with massive volatility at some point. The first Fed Funds cut took almost two months before it gave up all the gains. The Halloween cut took one day. Yesterday took a few seconds before the cascade began. And it is painful and it will continue as long as you participate. I know this short term market focus is tough to shake. It’s easy to be drawn in and participate. Who can miss out on the promise of the big rally? There seems to be a perception that you aren’t a serious investor if you don’t play along. Once you place that first bet based on the Fed you are hooked. Traders who got in before 2:15 yesterday, probably felt they had to get out at 2:30, if not short the decline. Then this morning they probably felt they had to cover at the open and maybe even buy the rally. This is ridiculous and if you don’t like it, refuse to participate.