"Do you feel opening gaps are a legitimate matching of orders to establish a fair price? "
No. Not based on the volume or # of Trades data I have seen. There is no such thing as 'fair price' in the financial markets. There is a price at which people will buy it, and that has little relevancy to any tangible measure of worth. AMZN is a great example. It hasn't made a profit, doesn't expect ot make a profit, and has no real plan to make a profit in the next 5 years. It is a great stock to trade, however. MSFT is worth $200 billion, a little more then GE. One makes software, and the other makes jet engines, locomotives, light bulbs, appliances, etc, etc. Tell me, has anyone ever seen a dividend check from MSFT? There is intrinsic worth, asset worth,
book value, etc. Mostly, in the markets, there is perceived value. The value of a stock is relative to that stocks future price performance. If it goes up, it was bought at a good price. If it didn't, well then it had a negative value to you. I try not to get caught up in a discussion of what something's 'value' is. If you really want to use that method of assessing a buy, I'd study commodities. Buy December Cattle futures in April and you will always make money. This year I got in early on a suspicion that Texas beef production would suffer in the summer due to el nino. In stocks its the supply and demand of the paper traded that one plays. And that is influenced by news, market conditions (and yes, I suspect the tapes out Monday will have a deleterious effect) and other factors, some of which have no direct bearing on the specific company or its product/service.
let suggest another course. Reading and following the markets is useful and necessary. Pick a stock - any one stock. Something large and heavilyu traded, AOL, GE, MSFT, whatever. Track the news earnings, announcements, forewarnings, market and sector influences for a month. See what coorelates and what doesn't.
Doing that will teach you more about the vargaries of the market and trading than anything else I know. Losing money will make you pay more attention the next time, but doing this will help things fall into place better.
lastshadow |
