The Whites of Their Eyes

In an old British era novel the colonel instructs his minions "Do not pull your triggers until you see the whites of their eyes!". Apparently this equity market believes likewise. The whites of their eyes being negative earnings surprises. It has completely lost its ability to predict, anticipate, discount.
Even a quarter or two ahead. Before digressing philosophically into why we might have entered such a period, let us consider some examples:

Alcoa: In this case, not only did the market try to wait until the whites of its eyes are showing, but it tried to deny that the enemy should be shot. Clearly the trends of increasing energy and labor costs are going to continue; meanwhile demand from automobiles in the number 1 consumer of aluminum (everyone - subscribe to the economist and get a copy of their annual statistical handbook!) is about to drop significantly, along with a number of manufacturing operations. You really have to buy the 2 quarters and we're done with this recession scenario to not discount some risk of multiple quarters of earnings drops at this company.

Likewise for copper/other industrial metals as well as oil (again - stats - the US is the number 1 consumer of oil BY A LONG SHOT). Each of the producers uses energy, so while they face decreases in demand, they continue to face high energy and labor costs (labor, after all, has to eat, and look at grain and meat prices, which should be last to drop). Higher energy prices ought to continue until both industrial demand and consumer demand slacken a bit further.

AMD: well, the market fully saw the whites of their eyes there.
Exceptions: Is there no connection between financial sector employment in the US and the number of Blackberries sold? Again, for this market it is not enough to see the outline of the enemy rushing at your with bayonets drawn. No rifles with telescopic mounts that can down the enemy at 1000 yards here - we need them to be 50 yards away, or if we are near-sighted, perhaps about 5 feet away. And then their bayonet, with the momentum of the body, may actually pierce the near-sighted shooter.

now the philosophy: almost everyone is now A.D.D. In the good old days only the elites engaged in speculation or investment. Computers did not act to speed up the velocity of noise and mayhem. The masses READ as much as they watched TV. There were fewer devices such as CNBC to propagate mass hysteria (only trading room rumors and phones!). Still, there was a fair amount of gossip and hysteria. But the markets ability to discount a quarter or two ahead seemed to largely be intact.

Now we have people with 5 minute attention spans WHEN they've remembered their rytalin.
Every Joe is now an investor, what with the internet, CNBC, etc. Just as admitting every idiot into a college has vastly increased the value of graduate degrees relative to college degrees (or those of elite institutions relative to MacColleges), so does the admittance of every idiot into trading make the market as a whole considerably more near-sighted. In fact, it is not just the retail investor, but every idiot with a HEDGE fund who can plot a chart on Bloomberg is creating massive amounts of momentum to every short-term trade idea. Partly it is because of the investor focus on short-term results (a quarterly drawdown will start making investors flee even if the fundamental trade idea is sound), and partly it is due to the preponderance of adrenaline junkies to serious investors in the business.

Consequence: trading driven technicals (such as everyone trying to exit a crowded trade at the same time) can, in the short-run, dominate fundamentals even when the fundamentals become known.

What does this mean to serious, thinking, long-term investors? (1)increase in potential opportunities (2)increase in patience required (3)stay away from leverage!