The problem of "should" and "is" with investing

"Market should do X, therefore I will do Y."

"Market is doing X, therefore, I will do Z."

One word separates the difference between the two statements above, yet that makes all the difference in the world. 

The "should" investor believes that he understands market dynamics and behavior better than the market itself. He has a view of value and believes that he has predictive behavior. "The market should reaction to the Fed." "The market should rebound." "This stock is overvalued and should decline."

The "is" investor believes that all key information is wrapped in the price. The trend-follower is the perfect "is" investor. "Prices are rising, there is a trend, and I should buy the trend." There is less analysis and more acceptance of what the weighted opinion of all market players is telling us. 

The believer in efficient market falls within this class. The investor who can express behavior in probabilities can be an "is" an investor. However, there is a difference between saying there is a likelihood and saying the market should behave in a certain manner.  

It is hard for many to always be an "is" investor. We would like to be a wise "should" investor; however, the should investor usually does not have a good track record. Hence, it is critical to understand and appreciate the difference between should and is.