Good morning. I read a lot. Most professional traders do. The world is increasing in complexity and shrinking in size, so it becomes increasingly more important to know what’s really going on.

Over the past couple of weeks, I can’t get two articles out of my mind.

First, an article written by John B. Taylor, a professor of economics at Stanford University entitled “Monetary Policy and the Next Crisis”.

http://tinyurl.com/88zpx6w

My takeaway from the article is simple: These guys have no flipping idea what they are doing. Definition of “these guys”: The central bankers throughout the globe who have gotten themselves so wrapped around the axle by constantly fiddling with and manipulating the exchange of money for goods and services that they all resemble Bruce Lee (without the good body, of course) in “Enter the Dragon”, as he wanders through a room full of mirrors. They have no idea what is real, and what is an illusion. Simply put, their policies have mucked things up to such an extent that their current policies are doing more harm than good…or are they? That’s the point — there is no clear answer.

So I’ll say it again — these guys have no idea what they are doing. But to you and me, the use of such terms as “central bankers”, “global monetary leaders” or “International Monetary Fund” implies superior knowledge and skill. Many of us simply assume that they know what they are doing.

To that, I say, “Wake up! They do indeed know what they are doing…but they don’t know whether their actions are doing more harm than good because they have no “control group”. They just assume that things would be worse if they did nothing at all. So they continue to conform to the definition of “insanity” — and you and I are paying the price.” When you step back and really scrutinize what these self-important masters of the financial universe have done, you’ll see that they have actually created or fostered all of the problems that they are now trying to fix — easy money to allow individuals and entire nations to live beyond their means, crowd manipulation through regulation intended to herd people into buying homes when they can’t afford them, the illusion of eternal financial security through the promise of retirement benefits that are funded by…promises.

I love the idea of living beyond my means, of owning a home, and of having eternal financial security. But I hate the idea of having to pay the bill for living beyond my means. I hate the idea that I actually don’t own my home — the bank does. I’m just responsible for the monthly payment. I hate the idea that my eternal financial security is just one sincere and heartfelt apology away from being eviscerated by the harsh reality that someone else is going to be forced to pay for my retirement, and their inability to pay for my retirement does more than ruin my day — it ruins my life.

If the subject matter were less tragic and easy to explain, someone could produce a hit reality show entitled “Central Bankers Gone Wild.” I will say it again, these guys have no idea what they’re doing — they just sound really smart, which is something that seems to be going around a lot lately.

The second article was published in IBD on Monday, “Could Germany’s Euro Exit Salvage The Currency Zone?” It is one of many articles that have been written about the notion that the strongest nation rather than the weak sisters should leave the Euro.

http://tinyurl.com/7vvsjkp

Wasn’t it not too long ago that the real question was whether Greece should leave? If you’ve been looking for more evidence that the barons of global finance have no idea what they’re doing, look no further. There is no consensus about which, if any, nation should leave the Euro, which is the ultimate in fiat currency based on a patchwork of nations with completely different cultures and political systems. (And if you do even cursory research on the origins of the Euro and of the puppet masters behind the formation of the Euro, you’ll see that the ultimate endgame is exactly what is being played out right now — that is, the forfeiting of sovereignty by the various nations in favor of a more central command structure — pretty Orwellian, if you ask me.)

So, what’s the takeaway? Actually, it’s pretty simple.

1. Don’t believe that the fine folks who seem to know so much actually know the right stuff. Most have never worked in the private sector — they’ve just manipulated it through the power of their appointed or elected position. They have no idea about “behavioral finance”, and that crowds actually do learn and adapt to manipulation. (Case in point: real businessmen know the difference between “temporary” and “permanent”, and base their decisions on that difference. Oh, we wish they wouldn’t…but they do.)

2. Use your powers of technical analysis to navigate the market. The Crowd knows more than all those morons in the pinstriped suits and fancy skirts. James Surowiecki wrote “The Wisdom of Crowds: Why the Many are Smarter than the Few and How Collective Wisdom Shapes Business, Economies, Societies and Nations”, which I highly recommend. His point is simple — each person in the Crowd knows something different than the others. Put together, the Crowd basically knows all that is knowable. The wizards of banking and finance only know models and theories (think: Alan “Easy Money” Greenspan sitting before Congress as a broken man, admitting that “There was a flaw in my model.” Thanks Al. You’re a peach — and I loved the “briefcase indicator” and your incoherent mumbling that sounded so intelligent and omniscient. Now, please shut up and stop helping us.)

Go with the Crowd. Read all that you can read so that you can at least be conversant in the topics of the day. They’re important. But at the end of the day, trust the direction of the market rather than the words of individuals who live to appear omnipotent (and who also wish to line their own pockets). Listen to the Crowd by watching what it does. The Crowd is ALWAYS right…except the one time that it is wrong. It bats nearly 1.000. It’s only wrong when it reaches extremes.

If you focus on what you see rather than what you hear, then you’ll be tuned into what really matters, and you’ll have much more control over your financial security. Better to have your financial security depend on your skill and competence rather than on the promises of someone you have never met (and probably wouldn’t like if you did).

3. Cherish the ability to admit when you are wrong. This is sorely lacking in policymakers throughout the world. Rather than simply admit when they are wrong and alter their course to be in alignment with what works, they double down. They continually “average down” on ideas and policies that have been proven not to work. (If they were traders, they’d have lost their money long ago. Now, they’re just losing yours.)

Don’t be the guy who strives to be right rather than to make money. If you realize that you are wrong, then correct that mistake. By correcting the mistake, you instantly become right.

Of course, the devil is in the details. It’s easy to say, “when you’re wrong, correct your mistake”; it’s much more difficult to know exactly when you are wrong…and what you are wrong about. That’s why we work together here at StockMarketMentor.com and OptionMarketMentor.com. We are “the Crowd” in our own little world. Our collective wisdom enables us to know more as a group than any of us knows as individuals. While I happen to own the domain names, each and all of us has a stake and a place in the Crowd.

So let’s work together. Let’s share what we know and what we think. The Wisdom of OUR Crowd will help each of us navigate these rough waters.

Have a good day.

–Dan