dbphoenix
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Best Thread Technical analysis... a load of ********
- Thread starter shadowninja
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Not sure that I see where this is going. Someone gets scared and starts unloading his
stuff onto the market. If there are no takers, the price goes down. If buyers come in, it stays stable or goes up in price. All this must show on a chart, surely?
Today's markets are scared about debt. People are not investing in what could be dodgy loans or mortgages. Banks and loan companies see their prices fall because traders see a possible fall in profits, or worse. It has to come out on a chart reading.
Split
dbphoenix
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Yes, it does. For example, a great many transactions took place over a six-month period beginning last Fall, between 1800 and 1900 in the NQ. The midpoint of that range in terms of volume (and, coincidentally, numerically) is 1850, which is what we hit today prior to the market open.
Db
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dbphoenix
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I think this is a topic on which the only real resolution is for us to agree to disagree. Or discuss it over a beer, get drunk, lary, nearly / actually have a little fight, THEN agree to disagree.
Plenty of people who's insight and contribution I respect are posting on this thread, and I'm finding myself in disagreement about some or all of what most of them are saying.
But thats part of what makes a market right?
GJ
And participants aren't calling each other fools or dunces (etc), either. Isn't that nice?
You really are tempting fate now aren't ya...huh?
Boy will you get a slap of the head if 'you know who' rushes in thru the door with his bleach white hair all tustled, sleep being rubbed furiously from his blotchy red eyes, blah blah..
rathcoole_exile
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GJ, I rarely agree 100% with you, but your $0.02 is ALWAYS worth more than many of the pfennigs offered elsewhere
Rhody Trader
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The actual action of market participant is what shows up in price charts, if we're talking about an exchange feed which only shows traded price. You could say that an indicative price feed (like in spot forex) would actually show you the intention of market participants to action, given that someone else was willing to take the other side, of course. In very active markets (like forex) there's probably not a really meaningful difference, though.
Either way, as long as we realize that what we see on the charts is history there's no reason why it cannot be useful. Since the charts essentially map the behavior of market participants and that sort of behaviour tends to fall in to patterns. Techincal analysis is basically about identifying those patterns.
That said, I believe having a feel of the participant psychology and a good understanding of market structure can help you better anticipate certain types of market actions and reactions. For example, those with an understanding of how the money market works have been at a distinct advantage in the markets over the last week or so.
TheBramble
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Perceptions and Beliefs – Lectures from the Pulpit – The Very Reverend Bramble
I have little faith in any sense of long term certainty in any of what I’m about to say and that is to a large extent the basis of the underlying message. (I started writing this last night and have only just got around to finishing it and am a little surprised to note that any of it still makes sense. To me).
If I were to tell you that I do not believe fundamentals lead price and that, to a large extent, price leads the fundamentals, there would I imagine be many that would think me crazy. But I do, and there are a few of us out here that believe the technicals lead the fundamentals. To a fundamentalist, this is not only heresy, it is impossible to imagine or even conceive of and quite beyond belief; their Belief. George Soros wrote "Markets influence the events they anticipate". I like George and although I wouldn’t want to be George, I sense I know he knows where he’s coming from and he would know I know he knows that he knows where I’m coming from.
I always appreciate the views of others and it’s great to hear what’s happening with other pros and on the institutional side of the business. But their take isn’t always necessarily any less herd like than the herd in some situations.
How many stocks that have taken a tumble in the last week have had any direct relationship with any aspect of the sub-prime mortgage business in the U.S.? Few. Very, very few in comparison to the sheer number that have gone South in that period. Yet that is the current ‘reason’ being promulgated through the media and the industry for the initial ‘cause’ of the global slide. The fact is, GJ’s final two words completely define for me what is the real cause of this large scale slide– ‘contextual factors’. We all know what this means (and if I’m off beam with my interpretation and it’s just me thinking this mate, do let me know – I wouldn’t want you to sit there quietly while I mis-quote a non-quote of yours which is nothing more than a mind-read on my part anyway).
Once one or two stocks in one specific sector start to show panic action, what is more likely to happen to other stocks in that sector? And then in associated sectors? And then in non-associated sectors, but in the same index grouping? And then other markets? And so on? It was panic. Institutional panic on a global scale doesn’t happen that often, not as often as little retail types panic, but when the institutions panic, it makes a much bigger splash worldwide.
The market makers and specialists are not panicking. No. They’re happy to watch the price come down, regardless of the basis – fundamental or technical or esoteric or whatever, because they know at some point they will stop coming down and will be relatively cheap compared to the price they will be at once they are sold again at the higher price they will be sold at. And who will sell? Those who buy cheaply now when there is so much bad news in the public domain of course. And the Billions that was ‘lost’ yesterday on the markets. It wasn’t lost of course. It’ll be back – just as soon as the stocks get back up to the point they’ll be at again when the big boys sell – that’s where those Billions will materialise into reality - a gain, again. And that’s where the money was made the last time they sold them to those they sold them to just before the top. Some people paid them a lot more for the stock than it cost them to buy. They’ve simply transferred ownership of their money to these people. And it’s usually the same people who volunteer for this money safe-keeping chore. It’s not been lost. Trust me. LOL!
The point is, even institutional types, all the types GJ mentions (banks, hedge funds, pension fund dealers, institutional currency strategists, investors / traders in other products (equities, fixed income, money markets etc)) have Beliefs about what is the cause of the current market phase. Just like little retail types and joe public too. It’s just the institutional quants and analysts can work up a very plausible rationale for why what is happening is happening to the point that you feel they must know more than you because you don’t even understand what they’re saying, but enough to know it’s something related to what you’re doing and you’re one smart cookie and if you’re not getting it – they must be a lot smarter than what you is, right? In joe public’s case, it has to be dumbed down and sound-bite fitted for the news. (btw - Hats off to Tom Hougaard on UK’s Radio 4 yesterday for not going with the herd and telling it like it really is [his view is strangely similar to mine ], but his voice was lost among the headlines). All of them have Beliefs. And they are ‘just’ Beliefs. Powerful when it’s one of yours and an object of variable curiosity when someone else has one that isn’t the same as yours.
Whether you believe in a Round Earth – or a Flat Earth, whatever your Belief, it’s almost impossible (for most) to even imagine let alone sensibly consider the possibility of the other. In fact, most get massively defensive of their Beliefs when they are challenged. There’s a little bit of us in all our Beliefs. Which makes sense, as all of our Beliefs constitute all of ‘Us’. So a challenge to a Belief is a challenge to our personal identity and even existence in some cases. Depends on how that Belief is Perceived.
Beliefs are wonderful and Strange things. We all have them. But we don’t all have the same Beliefs about the same things. Our Beliefs colour our Perceptions; And our Perceptions Value our Beliefs. Which is why it’s so tough to change them. It’s even tough to recognise them for what they are. And what they do. And how and when they kick into action as a result of our perceptions, which are filters for our Beliefs and are modified by our Beliefs.
When a strongly held Belief (is there any other kind) gets sufficiently challenged to the point it can no longer be held, all the Energy used in previously maintaining that Belief (and all Beliefs require Energy to be maintained) is released and goes into building support for the Belief which is going to replace the previous one. You can’t not have a Belief about something you once had a Belief about – you can only have a different Belief. New Beliefs pick up more energy then the previously discarded one had associated with it. So if you pick up more than one new Belief in any one day, you’ll probably need an extra bowl of cornflakes or something for breakfast. (I’ve found that by just having two bowls of cornflakes and working on the assumption I am going to have a couple of Beliefs changed actually brings about the change expected. But that’s just a Belief I have.)
Beliefs determine what we do and how we go about what we do. They determine how we interpret ‘reality’. They literally describe and proscribe every moment of your Life. They’re that powerful.
For instance. If you Believe you need to ‘strive’ for something – this rather smacks of being difficult and it therefore it probably will be.
If you Believe you simply need to just ‘go out and get it, simply pick it from the tree’ – it tends to suggest it’s going to be easy and you just need to go out and pick it. And it probably will be.
Just think of two things you regularly do: One that’s easy and one that’s hard. Try reversing your expectation of the effort required to do them next time you do them. Bearing in mind how tough it is to change Beliefs, just pretend, that one time, and see what happens.
That’s the thing. Whatever you Believe will usually tend to manifest itself for you. Two people going after the same thing with the absolute certainty they’re going to get it – one thinking it’s going to be hard, the other easy – they’ll both likely achieve their outcome because of their unshakeable certainty in achieving it. But they’ll both take a different route to get it. And each will find their expectations (or Beliefs) about how it was going to be have been supported by subsequent events and reality.
What am I driving at? Anyone still hanging on?
The Beliefs others may have about why the market is currently doing what it has been doing are as useful (or not) in taking action to profit from their likely assessment of what the markets are going to do next as are my Beliefs that not needing to know why the market is doing what it is doing are to me. Point: Their Belief that they need to know the cause is as valid for them as is mine in knowing I don’t need to know.
I used to believe that fundamentals led price – I now don’t – I believe the opposite. Point: Beliefs can and do change (which is why I may well come back and refute the entire contents of this post as some point in the future, or past).
Institutional types, other professionals and all manner of other folk (like us) actively involved in trading the markets are apt to act like each other for brief periods under some conditions. Point: All of us sometimes are smart, sometimes herd like, sometimes need assurance and reasons, sometimes freeze, sometimes shoot from the hip, sometimes consciously go with instinct (rather than just go with our Instinct) and sometimes go with the flow (not needing to any of the previous) and trade well. The amount of time you spend in any of these states is directly proportional to your trading success.
Regardless of your Beliefs in why the market is doing what the market is doing at any given time and what that might or might not mean for potential future action, they are your Beliefs and either work or don’t work for you. This is variable with time and experience. It is valid for you at a specific point in time only. Nobody else needs your Belief, nor wants your Belief. You can only change your Beliefs by exposure to experience and time. Some Beliefs change slowly, others in a snap. Some not at all. Ever. And there’s no right or wrong in any of this. It just is. Putting a brake on this apparently inexorable trip into the realms of the metaphysical, and getting back to thread topic…
TA for me in the beginning used to be indicators. Loads of ‘em. Then it was basic price patterns and no indicators. Then pure fundamentals. Then basic price patterns and price, time and volume. Then cycles. And then some weird stuff. And a bit more weird stuff. Then cycles with multiple timeframes. Then I added in X-market factors. Then I pulled in price, time and volume again with basic chart setups and so on…
And not forgetting the period when I didn’t believe the markets existed at all and it was just me imagining them and my trading of them (and I did that for quite some time and I still haven’t shaken the Belief of being totally convinced I was spot on with that one and even more that it made little difference to what I did or how I did it or my overall profitability. Actually, with the sense it’s only you – you don’t care so much if you win or lose as you’re the only one on both sides of the trade and the ‘not caring’ makes a big difference and still does). And it’s changing the whole time. Beliefs in what makes for valid market assessment are changing the whole time. Total fundamental analysts may not always have been or will always be, total fundamental analysts. Technical analysts – ditto.
Final Two Points.
TA is not BS. Neither is FA. Nor anything else. It’s whatever works for the individual at the time. And almost everything does, at the time, for a time – if only in the past. There’s a reason why you use what you use and don’t use what you don’t use. And there’s a reason why this changes. Your point of view was as valid then as is your new one. For you.
Whatever causes (if anything causes) the market to do what is does (has done) may or may not be relevant to what you or I choose to interpret as likely to influence what it is going to do next. You only ever get to examine the correctness of your position in retrospect. And modify your Beliefs accordingly. Or not.
Bless you my children. For in many of you, I see you are the future, my future, and let your profits become one as with mine, and your losses multiply and become abundant into the land and the hands of those that keepeth all the goodies, for I shall look after them as mine own and verily, shall they be good in the site of my account.
And here endeth the sermon.
I have little faith in any sense of long term certainty in any of what I’m about to say and that is to a large extent the basis of the underlying message. (I started writing this last night and have only just got around to finishing it and am a little surprised to note that any of it still makes sense. To me).
If I were to tell you that I do not believe fundamentals lead price and that, to a large extent, price leads the fundamentals, there would I imagine be many that would think me crazy. But I do, and there are a few of us out here that believe the technicals lead the fundamentals. To a fundamentalist, this is not only heresy, it is impossible to imagine or even conceive of and quite beyond belief; their Belief. George Soros wrote "Markets influence the events they anticipate". I like George and although I wouldn’t want to be George, I sense I know he knows where he’s coming from and he would know I know he knows that he knows where I’m coming from.
I always appreciate the views of others and it’s great to hear what’s happening with other pros and on the institutional side of the business. But their take isn’t always necessarily any less herd like than the herd in some situations.
How many stocks that have taken a tumble in the last week have had any direct relationship with any aspect of the sub-prime mortgage business in the U.S.? Few. Very, very few in comparison to the sheer number that have gone South in that period. Yet that is the current ‘reason’ being promulgated through the media and the industry for the initial ‘cause’ of the global slide. The fact is, GJ’s final two words completely define for me what is the real cause of this large scale slide– ‘contextual factors’. We all know what this means (and if I’m off beam with my interpretation and it’s just me thinking this mate, do let me know – I wouldn’t want you to sit there quietly while I mis-quote a non-quote of yours which is nothing more than a mind-read on my part anyway).
Once one or two stocks in one specific sector start to show panic action, what is more likely to happen to other stocks in that sector? And then in associated sectors? And then in non-associated sectors, but in the same index grouping? And then other markets? And so on? It was panic. Institutional panic on a global scale doesn’t happen that often, not as often as little retail types panic, but when the institutions panic, it makes a much bigger splash worldwide.
The market makers and specialists are not panicking. No. They’re happy to watch the price come down, regardless of the basis – fundamental or technical or esoteric or whatever, because they know at some point they will stop coming down and will be relatively cheap compared to the price they will be at once they are sold again at the higher price they will be sold at. And who will sell? Those who buy cheaply now when there is so much bad news in the public domain of course. And the Billions that was ‘lost’ yesterday on the markets. It wasn’t lost of course. It’ll be back – just as soon as the stocks get back up to the point they’ll be at again when the big boys sell – that’s where those Billions will materialise into reality - a gain, again. And that’s where the money was made the last time they sold them to those they sold them to just before the top. Some people paid them a lot more for the stock than it cost them to buy. They’ve simply transferred ownership of their money to these people. And it’s usually the same people who volunteer for this money safe-keeping chore. It’s not been lost. Trust me. LOL!
The point is, even institutional types, all the types GJ mentions (banks, hedge funds, pension fund dealers, institutional currency strategists, investors / traders in other products (equities, fixed income, money markets etc)) have Beliefs about what is the cause of the current market phase. Just like little retail types and joe public too. It’s just the institutional quants and analysts can work up a very plausible rationale for why what is happening is happening to the point that you feel they must know more than you because you don’t even understand what they’re saying, but enough to know it’s something related to what you’re doing and you’re one smart cookie and if you’re not getting it – they must be a lot smarter than what you is, right? In joe public’s case, it has to be dumbed down and sound-bite fitted for the news. (btw - Hats off to Tom Hougaard on UK’s Radio 4 yesterday for not going with the herd and telling it like it really is [his view is strangely similar to mine
], but his voice was lost among the headlines). All of them have Beliefs. And they are ‘just’ Beliefs. Powerful when it’s one of yours and an object of variable curiosity when someone else has one that isn’t the same as yours.Whether you believe in a Round Earth – or a Flat Earth, whatever your Belief, it’s almost impossible (for most) to even imagine let alone sensibly consider the possibility of the other. In fact, most get massively defensive of their Beliefs when they are challenged. There’s a little bit of us in all our Beliefs. Which makes sense, as all of our Beliefs constitute all of ‘Us’. So a challenge to a Belief is a challenge to our personal identity and even existence in some cases. Depends on how that Belief is Perceived.
Beliefs are wonderful and Strange things. We all have them. But we don’t all have the same Beliefs about the same things. Our Beliefs colour our Perceptions; And our Perceptions Value our Beliefs. Which is why it’s so tough to change them. It’s even tough to recognise them for what they are. And what they do. And how and when they kick into action as a result of our perceptions, which are filters for our Beliefs and are modified by our Beliefs.
When a strongly held Belief (is there any other kind) gets sufficiently challenged to the point it can no longer be held, all the Energy used in previously maintaining that Belief (and all Beliefs require Energy to be maintained) is released and goes into building support for the Belief which is going to replace the previous one. You can’t not have a Belief about something you once had a Belief about – you can only have a different Belief. New Beliefs pick up more energy then the previously discarded one had associated with it. So if you pick up more than one new Belief in any one day, you’ll probably need an extra bowl of cornflakes or something for breakfast. (I’ve found that by just having two bowls of cornflakes and working on the assumption I am going to have a couple of Beliefs changed actually brings about the change expected. But that’s just a Belief I have.)
Beliefs determine what we do and how we go about what we do. They determine how we interpret ‘reality’. They literally describe and proscribe every moment of your Life. They’re that powerful.
For instance. If you Believe you need to ‘strive’ for something – this rather smacks of being difficult and it therefore it probably will be.
If you Believe you simply need to just ‘go out and get it, simply pick it from the tree’ – it tends to suggest it’s going to be easy and you just need to go out and pick it. And it probably will be.
Just think of two things you regularly do: One that’s easy and one that’s hard. Try reversing your expectation of the effort required to do them next time you do them. Bearing in mind how tough it is to change Beliefs, just pretend, that one time, and see what happens.
That’s the thing. Whatever you Believe will usually tend to manifest itself for you. Two people going after the same thing with the absolute certainty they’re going to get it – one thinking it’s going to be hard, the other easy – they’ll both likely achieve their outcome because of their unshakeable certainty in achieving it. But they’ll both take a different route to get it. And each will find their expectations (or Beliefs) about how it was going to be have been supported by subsequent events and reality.
What am I driving at? Anyone still hanging on?
The Beliefs others may have about why the market is currently doing what it has been doing are as useful (or not) in taking action to profit from their likely assessment of what the markets are going to do next as are my Beliefs that not needing to know why the market is doing what it is doing are to me. Point: Their Belief that they need to know the cause is as valid for them as is mine in knowing I don’t need to know.
I used to believe that fundamentals led price – I now don’t – I believe the opposite. Point: Beliefs can and do change (which is why I may well come back and refute the entire contents of this post as some point in the future, or past).
Institutional types, other professionals and all manner of other folk (like us) actively involved in trading the markets are apt to act like each other for brief periods under some conditions. Point: All of us sometimes are smart, sometimes herd like, sometimes need assurance and reasons, sometimes freeze, sometimes shoot from the hip, sometimes consciously go with instinct (rather than just go with our Instinct) and sometimes go with the flow (not needing to any of the previous) and trade well. The amount of time you spend in any of these states is directly proportional to your trading success.
Regardless of your Beliefs in why the market is doing what the market is doing at any given time and what that might or might not mean for potential future action, they are your Beliefs and either work or don’t work for you. This is variable with time and experience. It is valid for you at a specific point in time only. Nobody else needs your Belief, nor wants your Belief. You can only change your Beliefs by exposure to experience and time. Some Beliefs change slowly, others in a snap. Some not at all. Ever. And there’s no right or wrong in any of this. It just is. Putting a brake on this apparently inexorable trip into the realms of the metaphysical, and getting back to thread topic…
TA for me in the beginning used to be indicators. Loads of ‘em. Then it was basic price patterns and no indicators. Then pure fundamentals. Then basic price patterns and price, time and volume. Then cycles. And then some weird stuff. And a bit more weird stuff. Then cycles with multiple timeframes. Then I added in X-market factors. Then I pulled in price, time and volume again with basic chart setups and so on…
And not forgetting the period when I didn’t believe the markets existed at all and it was just me imagining them and my trading of them (and I did that for quite some time and I still haven’t shaken the Belief of being totally convinced I was spot on with that one and even more that it made little difference to what I did or how I did it or my overall profitability. Actually, with the sense it’s only you – you don’t care so much if you win or lose as you’re the only one on both sides of the trade and the ‘not caring’ makes a big difference and still does). And it’s changing the whole time. Beliefs in what makes for valid market assessment are changing the whole time. Total fundamental analysts may not always have been or will always be, total fundamental analysts. Technical analysts – ditto.
Final Two Points.
TA is not BS. Neither is FA. Nor anything else. It’s whatever works for the individual at the time. And almost everything does, at the time, for a time – if only in the past. There’s a reason why you use what you use and don’t use what you don’t use. And there’s a reason why this changes. Your point of view was as valid then as is your new one. For you.
Whatever causes (if anything causes) the market to do what is does (has done) may or may not be relevant to what you or I choose to interpret as likely to influence what it is going to do next. You only ever get to examine the correctness of your position in retrospect. And modify your Beliefs accordingly. Or not.
Bless you my children. For in many of you, I see you are the future, my future, and let your profits become one as with mine, and your losses multiply and become abundant into the land and the hands of those that keepeth all the goodies, for I shall look after them as mine own and verily, shall they be good in the site of my account.
And here endeth the sermon.
Heckler from the audience
When i want to do something other than rely on my own level of expertise (whatever that is) I try to find the best I can find to 'talk' to on a given issue. Within the context of this discussion I shall simply state that one of the best to be found would have been a guy called Gerald Loeb. I am not really allowed I suspect to quote too much directly so I will refer anyone who is interested to his book originally written in the 1930's "The Battle for Investment Survival) and reprinted multi times. If you don't want to read it all then for this discussion just focus on chapters 13 to 15. I'll summarise those (correctly,read and decide for yourself) ?)...above all else the leading factor behind market moves is Psychology...price action and fundamental information (data) are lagging and explain only what in effect has been decided apriori by psychology.
This is not to deny the relevance of fundamentals ..far from it and the same goes for charting...but the latter are subservient to psychology.
Burn the pulpit and all who stand in her.
When i want to do something other than rely on my own level of expertise (whatever that is) I try to find the best I can find to 'talk' to on a given issue. Within the context of this discussion I shall simply state that one of the best to be found would have been a guy called Gerald Loeb. I am not really allowed I suspect to quote too much directly so I will refer anyone who is interested to his book originally written in the 1930's "The Battle for Investment Survival) and reprinted multi times. If you don't want to read it all then for this discussion just focus on chapters 13 to 15. I'll summarise those (correctly,read and decide for yourself) ?)...above all else the leading factor behind market moves is Psychology...price action and fundamental information (data) are lagging and explain only what in effect has been decided apriori by psychology.
This is not to deny the relevance of fundamentals ..far from it and the same goes for charting...but the latter are subservient to psychology.
Burn the pulpit and all who stand in her.
TheBramble
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Since when did Perceptions and Beliefs fall outside the realm of Psychology?
Can anyone else smell burning....?
Can anyone else smell burning....?
barjon
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Tony.
a couple of points:
Firstly, if money is being withdrawn from the market then it is "lost" to the market and prices will go down commensurate with the amount of money withdrawn (quite aside from other factors).
Secondly, I can't quite get my head around price leading fundamentals (except peripherally, perhaps). Whatever the short and medium term drivers may be, in the long term the market (not derivatives) is all about investment and income drawn from the stocks and shares via dividends - in the long run price appreciation is a bonus. Whilst the health of the economy is affected, in part, by the health of the market it stands on its own and that economic growth leads to higher profits and thus higher dividends and thus higher prices - it's why the damn thing has been going up for three hundred years
just my two pennyworth and all imo, of course
cheers
rols
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Do I detect a whiff of the Unitarian?
The Vicar of Bramble sure knows how to rouse the rabble and leave the infidels quaking at the knees.
I too was amused at ITN's news coverage of the £64 billion 'lost' and 'how it will affect us all.'
Except they didn't really explain how it would affect us all , they just kept repeating how terrible it all was.
Now anybody unfortunate enough to be holding short future positions from last night would probably disagree with me. And that's just a perception, not a belief...
"it's why the damn thing has been going up for three hundred years "...as it really ? factor in notions of purchasing power which include fluctuations in currency relative strengths , and general inflationary factors etc etc...the so called upward movement would look a lot less flattering and obvious after such an adjustment and when you then consider how that more modest gain has been distributed why would Joe Public care a damn about it as he got so little of it....I've said it before, for the crowd it is barely a benevolent churning mechanism ...for those who really know what they are doing to a greater ,or lesser degree it's a great little wealth transferrence machine....my current belief on the subject (just to satisfy Tony) is that I am performing a vital parasitic function in raiding pension funds thereby denying funds to many people who simply do not know how to enjoy it. I may feel differently next year.
I may feel differently next year.I hold a portfolio of stocks that are meant to be long term growth. I would not dream of buying such a stock unless the fundamentals were good, within my criteria. All mine, except one, have shown 100% EPS growth over the last four years. All have dividend cover more than twice covered by earnings. I've got a set of guidelines in place that allow me to sift all fhe information I need to put on a buy list. But I'd never buy any of these stocks until the chart tells me that the time is right.
All of these stocks are small cap. Nothing in the Footsie could get into my list unless it was a mine and they have been expensive.
This is quite separate from my trading activities. Footsie shares go up and down due to speculation and TA. Very few are worth the money paid for them. What in Footsie is capable of 100% EPS in five years? They are all froth and speculation, which is why they fall like lead in any scare. If they are subject to takeover, the company taking them over wants market share, usually, and is probably paying through the nose for it.
Split
All of these stocks are small cap. Nothing in the Footsie could get into my list unless it was a mine and they have been expensive.
This is quite separate from my trading activities. Footsie shares go up and down due to speculation and TA. Very few are worth the money paid for them. What in Footsie is capable of 100% EPS in five years? They are all froth and speculation, which is why they fall like lead in any scare. If they are subject to takeover, the company taking them over wants market share, usually, and is probably paying through the nose for it.
Split
barjon
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Yeah, me too, Split, but I'm getting rather too long in the tooth to be bothered about long term anymore
Not sure about the "inflation etc adjustments", Chump. There was a tale in Money Magazine some years ago about a woman who invested $5000 with Merrill Lynch in 1944, when she died 51 years later her $5000 had compounded to more than $20,000,000 and her portfolio payed $750,000 in dividends in the year of her death. Similarly, $1 invested in the stock market in 1802 would have compounded to over $7,000,000 by 1997 . (All dividends reinvested, of course). And there's Warren Buffet...............................
I just happened to be reading these gems recently in Gary Smith's How I Trade For a Living - it's a good read.
The point of the stories is to explain why he only trades long on the basis that the long term continual rise is "the edge".
('course buy and hold forever is no fun is it which is why I persist in "trading" even though my "active investor" wife outperforms me most years )
cheers
jon
Not sure about the "inflation etc adjustments", Chump. There was a tale in Money Magazine some years ago about a woman who invested $5000 with Merrill Lynch in 1944, when she died 51 years later her $5000 had compounded to more than $20,000,000 and her portfolio payed $750,000 in dividends in the year of her death. Similarly, $1 invested in the stock market in 1802 would have compounded to over $7,000,000 by 1997
. (All dividends reinvested, of course). And there's Warren Buffet............................... I just happened to be reading these gems recently in Gary Smith's How I Trade For a Living - it's a good read.
The point of the stories is to explain why he only trades long on the basis that the long term continual rise is "the edge".
('course buy and hold forever is no fun is it
which is why I persist in "trading" even though my "active investor" wife outperforms me most years )cheers
jon
I would say that there is an inter-relationship between them and it's not a simple case of one leads the other. There is a certain "matter-of-fact" worth in a stock derived from its underlying balance sheet. This will, to some extent, "inform" the price. However there is also a high level of expectation or lack of expectation about underlying performance, which provides a certain level of volatility or risk. This is further compounded by the expectation of the market with respect to the stock as a negotiable and tradeable instrument. This will incorporate many other factors, such as the interest corporations may have in acquiring the stock for their own purposes and the propensity to disseminate good/bad news and for this to scare the herd. Further there are factors of general market volatility as seen over the past week resulting from many sources. The balance in the short to medium term rests, therefore in price, rather than fundamentals.
Yes - a wonderful succint phrase
Not just panicking I think, but absolutely ecstatic. It makes the task of accumulation so dammed easy. And when they are ready to distribute.... well.....name a price
I should think the brokers would be the miserable lot in the medium term, but not perhaps over the last week
I have only pulled out one phrase out of your section on beliefs. Really great analysis here with which I totally agree.
I think that we should strive to understand the market in the best way that we can, one that is in harmony with our belief system at the time. Our understanding or, perhaps a better phrase might be our practical application of it, will succeed or fail and provide evidence of the extent to which we are in harmony with the market.
Charlton
dbphoenix
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It isn't necessary to do even that. The "market" has gone up, goes up, and will continue to go up because it dumps its losers and regularly seeks new blood. Otherwise, the Dow would consist of GE and little else. The ideas that the market will always go up, that one should focus on the long side, that everything will come out allright if one only has faith are nice rationales for buy-and-hold, and carry more than a little weight because they are more than a little true. They work, however, only if one buys "the market", something which the little guy could not do until fairly recently. If one does not buy the market, he must pick and choose, and that's where he gets into trouble.
Db
Jon,
$1 into X$ is about as pertinent as a strong breeze to a knickerless nun at a chastity party. Do you really need me to poke the holes in that old chestnut ? Lets' see $1 on a company that on a probability basis didn't even exist 30 years later means that that same dollar 100 years later is worth ..er nothing....survival selectability.. as an exercise if your years allow...go back over the Dow start when you wish over the last decade then peal back at slots of your choice ,but between say 15 to 30 years slices and then let me know what % of the constituents were still constituents of that universe at the next slice back and then the one prior etc etc...statistics next to war, it's got a lot to answer for.If I wasn't so humble I'd say I know what I am talking about. either that, or I have wasted an awful lot of time.
$1 into X$ is about as pertinent as a strong breeze to a knickerless nun at a chastity party. Do you really need me to poke the holes in that old chestnut ? Lets' see $1 on a company that on a probability basis didn't even exist 30 years later means that that same dollar 100 years later is worth ..er nothing....survival selectability.. as an exercise if your years allow...go back over the Dow start when you wish over the last decade then peal back at slots of your choice ,but between say 15 to 30 years slices and then let me know what % of the constituents were still constituents of that universe at the next slice back and then the one prior etc etc...statistics next to war, it's got a lot to answer for.If I wasn't so humble I'd say I know what I am talking about.
either that, or I have wasted an awful lot of time.Similar threads
