Gersh, don't worry - T/A stinks, in this case it's easy to understand
First, as we know, "dji" is a kind of self-sh**ting - when companies become weaker, they take new rising stars and put them in the index-curb.
Try it out! Take the world's strongest Software-company (SAP) out of the "DAX", and the this-years-German-boom is haded.
So, every statistic with indices is a mess alone because you cannot make statistics with measuring-values as you like.
It's similar with economy-indices, but this is a longer item.
Second, you can take a lot of index-members itself - f.e. Compaq - and see, that every linear approach is not approaching - like a lot of this T/A is just too simple for describing the reality.
Compaq (but also every successful hitech-company) was growing over-proportional, more than industry, more than sector and more than we had believed at every moment of it's history. So it's also wrong to critisize high P/E's when a company is growing exponentially. WHEN. So, as you can track, most "corrections" during the last years wasn't "corrections" - the stocks came back after a few weeks to the same valuations.
IMHO it's useful to track the indices intraday for getting an impression of the markets mood - not more and not less.
If you are long, and if you haven't any pressure from outrunning options, you cannot lose as long as your underlying companies don't break away. So the REAL danger comes from haded trends (see NIKE), survived technology (UNIX), immovable government (IBM) or just bad tasting products (MCD).
Happy trading!
Jury
PS: I had "dips" last year from more than 40% off the maximums before - and I'm staying GREAT there now. Be patient! Don't sell at dips! |
