Ignore the Data Points – Watch the Trend

avatarthumbnail.jpgThe talking heads on Fox News yesterday were cautioning viewers not to read too much into the swings in the Dow Jones Industrial Average based on the statements of whichever Congressional caucus was blaming the other for the failure to pass the bailout bill.

While they never said the words, the basic concept was not to sweat the individual data points but to watch the overall trend. And one day does not a trend make.

The Dow soared 485 points today meaning that for the past two days, the net drop was 292 points. Oddly enough (note the sarcasm) the wire stories I’m seeing don’t refer to the amount of money that on paper was regained, though yesterday’s stories were quick to quantify the paper losses from the 777-point drop.

Such is the way of the mass media.

This isn’t to say we’re out of the woods, of course. But it does give some credence to one of the comments left by a loyal reader yesterday. Without going into details, I can tell you without a doubt that Scott knows of what he speaks when he says …

It is a little painful…but let the markets flush themselves out. That is the tough love of capitalism.

During last week’s presidential debates, Obama accused McCain of taking a hatchet to what needed a scalpel. This is a different topic but it appears the logic remains … at the end of the day, going for the dramatic simply to alleviate fear is going to be useless if the dramatic move has little actual benefit.

[tags]Phoenix real estate, bailout bill[/tags]

Jonathan Dalton

Jonathan Dalton is a 40-plus-year resident of the Valley and has been helping folks buy and sell homes since 2004. He can be reached at 602-502-9693 or info at allphoenixrealestate.com.

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