If you haven’t been following financial markets lately, they have been rather inexplicable. That is, while the economy has been going down: banks are writing off billions of dollars, unemployment is getting higher, and inflation is kicking in, the stock market has been going up, and it’s less than 10% of its highest ever.

It’s not rare to have such discrepancy between the economy and the stock market’s herd behavior. But such times – although can be very profitable – are extremely dangerous, as euphoria can turn into panic within minutes with no warning sings.

So on Thursday night, I was quite amused to watch on TV a senior financial analyst of one of the top investment banks, arrogantly explaining why the stock market would continue going up, and how stupid everyone who couldn’t see it was. (well, he used nicer words, but that the gist of what he was saying). This was on Thursday night. On Friday morning the stock market crashed by more than 3% -- which is a lot.

So a few things it’s always good to remember when you deal with financial markets:

1. As much as we learn about them, no one really knows how they work. The best anyone can do is guess right more than guessing wrong. The most successful investors are right no more than 55-60% of the time.
2. Never believe to anyone who tells you he or she knows what the market will do. Nobody knows, and all financial analysis methods are not more of a science than the traditional crystal ball reading
3. Even if you are confident that you are right, stay humble. Markets have a nice tendency to blow air out of people.

Unfortunately, most financial gurus believe in what they say despite proofs to the contrary, and I have little doubt that soon, the same top analysts will express his then to be formed opinion in the same arrogant confidence he did on Thursday.

This is why I like it when things go wrong.