By Tom Bradley

In 26 years of doing this, one of the phrases I find least useful is, the market “is range bound” or “will stay in a narrow trading range over the next X months”. I don’t have conclusive data on it, but I believe that these types of predictions are almost never right.

I’ve heard these words used more over the last couple of weeks. It’s not surprising, because they usually come out after the market has had a good run and people are worried that it’s running out of steam.

The implications of those words are that (1) the speaker has an ability to predict the market in the short term, and (2) the market is going to do something it hasn’t been done since...well, I can’t remember when. Certainly not in the last decade or so. What sounds like an innocuous little throw-away comment is actually a very bold statement.

I thought this was important to write about only because there are times when investors base decisions on this kind of analysis. They shouldn’t.