The ability not to trade may be more powerful than ability to trade.

I quote trading commandments often when I write as I truly do live by them (when I don’t live by them I have this nasty habit of being wrong). One of those commandments is simply ‘The ability not to trade may be more powerful than the ability to trade.’ Never get to tape it on my Bloomberg, even I wanted to..

I don’t give price forecasts because, after all, if I knew where the S&P 500 were going to be at certain dates in the future, I would not need to crack my brains, deal with uncertainties and would likely have a 125 foot yacht in the Mediterranean fully stocked with nice women and live like a P. Diddy. All kidding aside, making those sorts of predictions is foolhardy, in my humble opinion. Even if you were to give me every data point six months ahead of time, I still would not be at all comfortable providing anyone with a price target.

There are just too many exogenous factors at play. I have no problem answering the question "Do you think the market has a good or bad risk/reward ratio at present?"

Investing is an art, not a science, and knowing when to be in the game and when not to be in the game is more important than what play to call. So I will say this, which could possibly be a new trading commandment—‘The ability not to make a forecast is more powerful than the ability to guess at a forecast’. And when we are facing times that are truly unprecedented in the financial markets, the ability to not make a specific forecast, I believe, is more important than ever.

I have been saying for a long time that I am neither a bull nor bear, just a cautious observer with the responsibility of managing other people’s money, plus my own. I am admittedly cautious, but not just to be cautious, rather to be able to have capital available at the other side of the financial situation that I believe we are in.