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Strategies & Market Trends : Gorilla and King Portfolio Candidates
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To: shamsaee who wrote (25426)5/27/2000 10:33:00 AM
From: mauser96  Read Replies (2) of 54805
 
There is very little evidence that TA works. The exception may be that TA can give a slight advantage over a period not exceeding a week or so. Even then, as evidenced by the fact that most day and short term traders are losers, it must be an art that can be practiced successfully only by a gifted few.
A more reliable way to judge overpriced markets is to look at the degree of speculation in stocks you don't own . (If you look at ones you own you are likely to regard the high price as a confirmation of your own cleverness). When P/E are exceedingly high compared to past markets, when companies with no earnings are preferred to real companies, when any kind of junk IPO goes up, this is a speculative market. The success of the dotcom companies was a real warning here. Ask yourself, are you and the people you know being motivated mostly by greed with only minimal fear? This isn't a bad time to gradually increase your cash while still keeping a core holdings. When fear and denial reign supreme, start putting some of your cash back in the market. Though some would disagree, I regard this as a modified"sleep better at night" form of LTB&H. At least it's worked well for me.
Remember this recent mania, it gives you a pretty good idea of what speculative markets look like, and how they end. Market prices are based on expectations, something that by it's nature can't be precisely measured. Looking at glasses half empty rather than half full can make a big difference, even if there is little if any change in the fundamentals.
Luke
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