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Pastimes : All Clowns Must Be Destroyed -- Ignore unavailable to you. Want to Upgrade?

To: hunchback who wrote (34124)	5/20/2000 10:42:00 PM
From: LLCF	Read Replies (2) \| Respond to of 42523

<distraction is one of the tools of government. reminds me of the Roman idea of giving the people "bread and circuses" to pacify them.> We may want to take our profiles off of our pages incase they start feeding gold bugs and bears to the lions when the market collapses! At least the lions will be getting 'rich food'. DAK

To: hunchback who wrote (34124)	5/21/2000 6:18:00 AM
From: re3	Respond to of 42523

from the toronto star today/// When the talk's not feel-good, it's time to buy This is a good news-bad news story that relates to the many e-mail questions and comments I receive from the readers. The goods news is that I will share this information with the readers because I think you will better understand how human emotion such as despair, fear and greed are getting in the way of sensible stock and mutual fund investing. The bad news is that some leveraged investors lost all their money during the recent collapse of technology stocks. It appears that many investors buy into exciting themes, hold on too long and then sell into yesterday's news. This applies equally to stocks and mutual funds, and I think the financial news media is a big part of the problem. Consider the bullish item on Corel Corp. in one of the national newspapers a while ago. The headline blares: Corel talks threaten Microsoft: analysts. Note the two key words: talks and analysis. Talk? Comedian Chris Farley used to say: ``That and a nickel will get you a hot cup of jack-squat.'' The analysts referred to were fundamental and not technical analysts, and it is important for investors to understand the difference. According to the Canadian Securities Institute, fundamental analysis is a study of the causes of supply and demand (for a company's shares). In other words, fundamental studies focus on such items as profit and loss statements, balance sheets, earnings forecasts and market share. The theory here is that if the demand for the company's products or services are strong, that will be reflected sooner or later in higher demand and higher prices for the company's shares. The technical analyst disagrees with this approach and believes the price of the company's shares already reflect this information. The Canadian Securities Institute defines technical analysis as a study of the effects of supply and demand (for the company shares). In other words, a technical analyst studies the demand for the companies' shares as opposed to the demand for the company's goods or services. In the case of Corel, it appears that the fundamental analysts quoted by the writer liked the potential of the Corel talks. Technically, however, the stock was overpriced at around $22 at the time. Here on March 26, I suggested the shares should be sold. More recently, with Corel's price around $9, a bearish item appeared in the same newspaper. The headline blared: Corel struggles to avoid cash crunch. Think about it. In less than three months, Corel has gone from taking on the world's biggest company to struggling to stay alive. The stock price has been reflecting this bad news all year by declining from the high in December, 1999, of around $60. I think that inexperienced investors who follow these emotional banners can be influenced into making poor investment decisions. The job of the technical analyst is to study the share-price behaviour and reject all of the existing facts concerning the company's current and future prospects. The technical analyst believes the price of the stock will change before the facts supporting the change become public knowledge. This approach removes human emotion from the investment decision and allows the technician to buy dull, out-of-favour stocks or funds, and then sell them when they are discovered by the financial media and the investing public. Over the years, technical analysts have also become keen observers of investor psychology. Consider some comments made 30 years ago by the legendary Charles Coppock in his publication, Leaves From A Traders Notebook: ``The market action of a stock is more a reflection of the supply and demand for stock certificates than the supply and demand for the corporation's products or services.'' ``The sheep running with the mass of his fellows hurries to his slaughter (marketwise, the majority lose). Bet against the crowd and sell when the buying pressure is greatest.'' ``Be suspicious of the completely obvious. (Stock prices discount influences before they are obvious to the majority.) Invest on the obvious and you invest too late.'' Currently, some early positive trend changes seem to be taking place in selected retail and transportation stocks, and I am not sure why. Before buying, I would scan those financial pages to make sure no feel-good stories are appearing on the sector. --------------------------------------------------------------------------------