Having Access To President Trump's Innermost Thoughts Is Killing Traders

It seems that information overload has infiltrated our culture like never before, and that's bad news for the vast majority of retail traders and investors if you ask me. "More is better" doesn't apply to information in a time when the S&P 500 is hypersensitive to presidential remarks and there's no shortage of those remarks, to say the least. That's not a commentary on the President himself, but on the milieu with delivers his innermost thoughts to our phones instantly, with markets tremulously reacting before anyone really has time to absorb what's been tweeted.

Obama was on Twitter too, but he wasn't known for tweeting anything that actually moved markets, so the nation is in uncharted territory with Trump's verbose version of transparency. I've been in the investing game through multiple presidents and haven't seen an equities market this reactive in a long time, and perhaps ever.

Now, I constantly tell my followers to "be reactive, not predictive," but this is a different brand of reactivity. We have to distinguish between reacting to fundamentals-based data and overreacting to every word and phrase, which is no recipe for success long-term. Frankly, we can't blame the President or Twitter for this; it's our own fault as an investing/trading community that's constantly jumping the gun rather than accumulating dry powder in anticipation of bona fide setups.

Courtesy: William Watts, MarketWatch

This will only get worse, of course. While I don't have a crystal ball, I can envisage a future in which economic data is fed to the public through a medium that resembled Tinder more than Twitter: "Swipe right if you're bullish, left if you're bearish..." At that point, the stock market will be 100% voting machine and 0% weighing machine, and the divorce between markets and fundamentals will be complete.

Okay, so it might not be as bad as all that... or maybe it will. Until then, let's all calm the heck down and turn down our sensitivity gauges, if only long enough to place a trade based on reason and not reaction.