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Strategies & Market Trends : Stock Attack II - A Complete Analysis -- Ignore unavailable to you. Want to Upgrade?

To: Paul Shread who wrote (86)	2/12/2001 2:26:23 PM
From: Michael Watkins	Read Replies (1) \| Respond to of 52237

Paul, I guess I have a hard time taking it seriously in the trading vehicles if it's not clear in the index itself. Excellent comment to discuss. We all know, or should, that indexes lie. The components of the index are shifted all the time. Its the First Big Lie of investing - a new investor comes to the office, sits down with glad handing salesperson, and is shown "The Chart". See this tiny dip here? That's the big crash of '29. And this tiny dip here? That's 1987. Really insignificant in the big scheme of things, right? Client nods, apparently grasping some big piece of news. Well that's why professional money managers recommend that you invest for the long run Client nods, eager to part with cash for the long run. [LOL!] --- Well, given the active 'management' of the indexes, they are meaningless except from a purely psychological perspective. They don't reflect the numbers of companies that have ceased to exist through mergers or outright failures; they don't reflect the poor performers being dropped off on a routine basis. They don't reflect at all the pain of the long term buy and holder of such companies. So I'd take an active trading vehicle over an index any time. In the shorter term, indexes have value. But drawing a line dating back 10 years? Far less value. Would love to see a poll on this: Given a sloping line dating back 10 years, or a break of a swing high or low that occured within the past several weeks, which data point will institutional traders and money managers place more weight upon? (I already know the answer to this question) as such I expect a higher low to form That may happen, and if so I'll exploit it, but I won't make trades that depend on it happening at some future point. As I said earlier, this is all (or should be) friendly speculation and discussion. Just the same I think I'll put on the cloaking device and go back to waiting for my plane to arrive...