The one good thing about breaking your leg (do let me know if there are any more…) is that you get lots of time to read those books you always meant to but never found the time. I have just finished Richard Dawkins "God Delusion" which naturally focuses on religion, a topic I am not going to discuss in this column, (however if you want a session under the hair dryer do
give me a ring!) but many of his observations about "belief" are just as relevant to the investment world.

Although professing to be rational we will almost always hang on to our beliefs despite damming evidence to the contrary. In fact many of our beliefs are held despite have done little research to justify them - "I have a gut feeling" being a classic example. Consistently good investors have one thing in common. They interrogate the facts and spend a lot of time doing it. Being of a sceptical nature helps and they are often true contrarians.

The current "belief" is long Japanese equities and short Sovereign debt; US Treasuries and UK Gilts in particular. Japan has had a lost decade or two when viewed from the West, but their economy is managed to support social cohesion not the disciples of Mammon, so from their side of the coin their policies have been far from a failure; not something we believe from our perspective.

This is something that is gaining credence over here. Obama intends to levy a tax on the investment banks to get back the taxpayers support despite the TARP program being designed to turn a profit for the US Treasury…one fine day. The EU is wrestling with similar measures and the whole concept of Western capitalism is being questioned; capitalism is the worst form of economics apart from all the others to paraphrase the great man.

Meanwhile in Greece they are beginning to question whether their second civilisation is coming to an end and the ECB ponders the wooden horse in its back yard. Morality is also up for grabs. It is obviously wrong for the greedy investment banks to run their "Ponzi" schemes off balance sheet but not it seems for governments. As the Greeks put it "Democracy passes into despotism" (Plato).

So what can we believe in? Human nature seems to be a pretty constant factor when it comes to markets. The majority are greedy for success and fearful of failure. Charts are, to me, the only reliable way into that mind set and the major markets are dangerously close to another dose of fear.

David Fuller's view Price charts are a reality check, in terms of supply and demand, so we need to muster all our objectivity when viewing their factual message. Otherwise, it is easy to rationalise or ignore what we see.

Due to preconceived notions, any of us can see three different things when we view price charts: 1) what we want to see; 2) what we think we are going to see; 3) what is actually there. The first two will cost us money.