Good response Jon,
Your concern for your acquaintances who are jumping on the bandwagon with total disregard for market dynamics is well founded, and many of them will someday suffer for it, but I don't think they are representative of a growing number of people like myself who started out knowing nothing and have been working hard at changing that. Last month in NYC thousands of people gathered to attend seminars and learn from one another about the very things you say are of no interest to the masses. Just last fall they met in California. I've heard of at least two conventions scheduled for the near future. Many of these people are becoming more sophisticated in their approach to the market, and their success will continue to attract participants for some time to come, even as others fall by the wayside.
What will scare me Jon is when everybody decides they should quit working to make trading a career. You have chosen to stay with a rewarding occupation, and I applaud you for that. Without people like you who are providing the expertise to build the infrastructure for tomorrow's economy, it will fall apart and the market will collapse. Fortunately, I think we are a long way from that.
As for my comments about the "market as a whole not outpacing its historical growth", you don't have to look nearly so broad as 10,000 issues. Just look at the S&P 500, or the 100 or the Dow Jones Industrials, and all of them are taking a breather. This of course lends support to your contention that the capital is being concentrated in too small a sector of the economy, but it also means there are a lot of strong companies whose stock is going to be very attractive when the reversal takes place. Two months ago when the Dow was making new highs, people were worried that only the blue chips were attracting buyers. That "corrected" itself when people were too afraid to buy them anymore, and the current concentration will correct itself when people are too scared to buy the current leaders. All I see is more dynamic in the repositioning of capital, not the kind of capital reduction that characterizes a bear market. And these rapid shifts in capital are a byproduct of the increased accessibility to the market place I've been talking about. I believe it's a new market, but I don't see it being as dangerous as you do.
As for EVERYBODY, that was simply a poor choice of words. Clearly not everybody is chasing the hot issues, at least not with all of their money. There is still an enormous amount of smart money that is staying put for the long haul.
Dan |
