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Strategies & Market Trends : Technical analysis for shorts & longs -- Ignore unavailable to you. Want to Upgrade?

To: Johnny Canuck who wrote (24480)	12/3/1999 9:11:00 AM
From: j g cordes	Respond to of 69853

Good image Harry, sadly true.. and therefore humerous in the truest sense. Most participants don't understand the market, nor do I claim to, but here are a few of my less publicized observations. A. The terms "invest" "investor" and "investment" are simply marketing terms which should be understood like "natural ingredients" when reading food labels. The fine print under the marketing hype of every product reads the same. Buyer assumes all risk and no privleges. B. Investors' short term memory and statistical norms work hand in hand to deceive us... by that I mean (no pun intended) that stocks tend to norm or trend up or down, and over time our expectations tend to norm with the direction of the trend. The result of these two conditions is that prices exceed any rational basis of valuation (both too low and too high) with investors that are themselves normed (conditioned due to short term memory) to accept irrational valuations. Its not just that stocks "tend to fluctuate" as JP said, its that we fluctuate. One day we're sanguine with pe ratios that are over 400:1, the next day we panic because they're 4:1. Where does this response come from? I think it comes from the "fight or flight response." We stay too long against our own rational appreciation of danger, then a moment later will run for the exits. Therefore I propose an emotional equation that reads: Fight/Flight = Greed/Fear