>Slowly investors are becoming more rational. Excesses correct faster. We may have frequent small quakes - preventing the big one.
Gottfried,
I just got around to reading my July issue of Louis Rukeyser's newsletter this afternoon [BTW, it's the only newsletter I subscribe to]. Here is a quote from page one that seems to be saying the same thing you said...
"Violent movements that used to last months are often over (and reversed) within days or even hours. Winners will continue to stay with the trend, which remains: up, up, up."
The concept of "staying with the trend" is an interesting one. Unfortunately, Louis didn't elaborate on that comment, nor did he mention what time-frame he was talking about. In addition, so what if the overall market trend is up, up, up? So what is one to do about "the trend"? One still has to pick individual stocks and select a target time frame. To me, this is where technical analysis comes into play, and I'm becoming increasingly convinced that relying on technical analysis is the only way I can reasonably deal with the market.
I simply can't buy stocks just because the overall trend happens to be "up" at the present time, without having some sense of entry and exit points relative to time. I think that for Louis to suggest that "winners will continue to stay with the trend" is essentially a meaningless statement. Not only that...I think it's a stupid statement because he failed to define what a "trend" is, for what period of time, and for what stocks.
Be that as it may, I think his take on "violent movements" is insightful - and seems to be consistent with your observations. Violent market movements today versus 1929 would make an interesting study.
Ice |
