Trader J's Inner Circle Message Board

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Strategies & Market Trends : Trader J's Inner Circle

NVDA 182.40

-2.3%

12:47 PM EST

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To: DM who wrote (3022)	1/2/1999 4:48:00 PM
From: Poet	Read Replies (1) of 56535

Hi DM and Melinda, Cookie Monster gave you as short and clear an answer as I can give to the question of valuations of parent companies spinning off IPO's. This is where my psychological training serves me well: essentially, people believe in the "halo effect", than when something good happens to one thing, the effect of the good spreads to the things near it, in this case, the parent company. This is why you'll see in daytraders' rooms when a particular company is spiking, an experienced trader will often call another company which is in the same business and that will spike as well. This is a psychological trading play more than one based on news or fundamentals, but a legitimate play nonetheless. Poet

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