Hi Jill,
Thanks for the post on the author's view of Psychology in the market place. Needless to say Herd Psychology is of paramount importance but wish more emphasis was placed on the Psychology inherent in my favorite areas of concentration, Fed's agenda, House's agenda, Time Capsules and Time Compression.
I feel too much emphasis is placed on Econ 101 fundamentals in stocks and not near enough in the areas above. I am not implying that fundamentals should not be considered when adjudicating stocks but it goes without saying that for the most part, fundamentals are almost always already reflected in the current price of stocks.
All anyone needs is an understanding of the above to see just two examples of what I am talking about:
How do we know we can count on the continuance of this bull market by understanding the above?
1. Everything being equal with the Fed., the Houses are always in control.
2. What is being equal mean with the Fed.? WHEN THE FED. IS JUST AS CONCERNED ABOUT THE ECONOMY AS THEY ARE INFLATION. In other words, they are not so concerned about inflation that they say to hell with the economy, we are going to kill inflation no matter what even if it means a recession and raise interest rates to untenable levels as they have in the past.
3. Then if Houses are still in control, what does that mean in so far as the markets are concerned? They always find the ways and means of aggrandizing their inventory. Their favorite ways are in the form of Pure And Simple TIME. Time of the day, time of the week, time of the month, time of the quarter and time of the year. Understanding the psychological significance of these Time Capsules will earn and or save the average investor a ton of money. One example was the most recent Psychological Beacon ( Memorial Day ), and what was the difference in the Friday before memorial day and the Monday following, 254 points on the NAZ. We then had the employment numbers and the PSYCHOLOGICAL reaction of what? Psychological Beacon number two ( LOOKING FORWARD), and this will continue into next week following a head fake or two in the mornings. What will be the next Psychological Beacon? July Fourth, and next? Earnings, and next? The run to fall, and next? The election, earnings run and the Jan. effect and the run to 2001. THIS IS PRIMARILY THE REASON THE BEARS AND DOOMDAYERS ARE GOING TO BE WRONG.
That is primarily the only things I care about in so far as the overall market is concerned but how about individual stocks?
Let's take one of the stocks that I am touting, ELON and look at my Psychological Reasons for liking it so much. Keep in mind that I now only hold two stocks, ELON, NTAP and options on Qcom from last week. What makes ELON my favorite in the present TIME CAPSULE? THE STRONGEST PSYCHOLOGY WITH AN INEVITABLE TIME COMPRESSION.
ELON-
Now, I admit that the tremendous Psychology that is coming to this stock and the inevitable time compression that will follow is the result of a fundamental occurrence that manifested itself in the form of a $300 million dollar deal with one of the largest power companies in Europe. The fundamentals of this deal are for all practical purposes reflected in the stock price but not the full dimension of Psychology.
ELON should not only see a tremendous run toward earnings as a result of the tripling of revenues but also experience a rare Time Compression in the last two weeks to ten days before such.
Thanks again for the post,
Voltaire |
