Milt, I occasionally check Lombard's intraday charts, and
I think it's generally true that in the January decline from
>10 to <8, there were many more large block trades than there
have been for the last week. This makes me think that the
Jan. drop was due to a large shareholder (institutional?) systematic
selloff, but that the last bit has been mostly due to the
individual investors either giving up patience and bailing
or succumbing to margin calls.
I'd be interested if any one of the TA experts on this
thread could back up this idea with any numbers.
I like to believe that the markets are *reasonably*
efficient, so I'm trying to convince myself that AXC's decline
of late is an instance of inefficiency, and not an expression
of some information that I don't have.
A side note: I don't believe that the markets are efficient
in the short term, but that long term they have to be. The
trick is to identify the difference. This is what bothers
me about index funds. By its nature, indexing is not efficient.
Imagine if everyone put all of their money into index funds (not
too far from what's happening right now) - then the basic rules
of supply and demand will ensure that whatever stocks are on
that list will go up in cost at the same rate! Without an
external (efficient) mechanism, there is nothing to distinguish
one stock on that list from another. I do agree that if indexing
is a small percentage of the market, and if the markets are
efficient, then indexing is the optimal strategy. But it seems
that the markets today have passed the point where the amount
of indexing is an imperceptible side effect. So what do you
do? Join the Ponzi scheme and dump everything into an index
fund, or wait for some semblance of efficiency to return? I
am currently choosing the latter, though along with all of you
am paying the price for it (in margin calls or lack of sleep or
whatever form your discomfort takes). I am a patient man, but
I wonder if this trend could last for a very long time.
Anyway, enough ranting.
William |
