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markets reality vs quantitative analyis

Over the past 12 months the S&P 500 is up about 6%.  Not the greatest but still not too bad, against this background of "strong" market performance you have earnings that are off by 20%.  This is unprecedented.  Never in the past 100 years has market performance been so decoupled from market fundamentals.

The pros don't know what to do, all their models scream sell and go short, and anyone who has followed this strategy has lost his/her shirt.

BTW that's why I don't talk about market fundamentals anymore, because the fundamentals don't follow; a weak recovery (granted the US government -- Federal/local has been shrinking since Obama came to power).  The weak recovery, the poor earnings tell you that you should be out of the market at best and even a little short -- Caterpillar for the 7th consecutive quarter has posted terrible performance.

Yet the market goes up!



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