After giving the issue a significant amount of careful thought, I have reached the conclusion that stock market investors are insane.

I toyed with individual stocks for a couple of months, and I recently went back to mutual funds.  I'm going to let my fund managers deal with it.  I did this after observing the behavior of the market.  That's where my theory of insanity was born.

Here are three examples of market insanity.  I will provide a news item, and I will follow it with two directions the market might take in reaction to the news item.  Both directions will make sense, but both are exact opposites.  I'm usually on www.MarketWatch.com in the mornings, but I'll jump around to different investing sites.  Each site has its own theories as to where the market is going, and why, and why the market went where it did.

The price of oil jumps
The market may go up, with the rationalization that higher oil prices will slow the economy and lead to interest rate reductions by the Fed.  OR, the market may go down, with the rationalization that the drag on the economy brought on by higher energy prices will damage corporate earnings.

Which way will the market go?  Who knows.

New Home Sales go Up
The market may go up, because real estate has been in the toilet and this is a good sign of an improving economy.  Or, the market may go down, because improvement in the real estate market means the Fed will freeze or even tighten interest rates in the short to mid term.

Which way will the market go?  Who knows.

Retail Sales slow
This is terrible news for the market, because it indicates a weakening economy and portends declining corporate earnings and possible layoffs.  Or, it's great news, because it means the economy will probably not overheat, leading to inflationary pressures and possible layoffs.

Which way will the market go?  Who knows.

I do know this.  You people are insane.  The market makes no sense.  Up is down, good is bad.  I've had it.  I'll let the guys at Vanguard, Janus and Loomis Sayles worry about my investments.  I'm going to put on a Jimmy Buffett CD.