When markets recover, the high flyers gets the most and immediate attention. Then the big stocks will make a move. The market eventually broadens.
What it says is once you have been in the market for a while, and you have a basket of stocks; you will have the understanding that if the economy is improving each year, all the stocks will move up. That is fundamental.
However, since there are only so much stock outstanding, more wealth will bid up the stocks. Then overbought will force the market makers to pull back to buy back. So, some stocks will tank for two years. This is technical.
Then, business is ever changing. Technology will obsolete some business. Some business will go out of business. That is inevitable.
This concludes that low technology stocks will survive on population increase(Warren Buffett's main investment theory). High technology, if we know the end of the tunnel, we can control the growth and invest safely with the management who knows the growth path. The growth path of technology is first with the discovery of the law of physics using human nature and the cost effectiveness, then grow with population growth. This is business.
How we view the investment, end up with looking at the demand side economy, which is entirely dependent on population. For instance, population increases by 1%; computers may have to increase by 6%. 6 computers for each person who wants to know more. |
