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Strategies & Market Trends : DAYTRADING Fundamentals -- Ignore unavailable to you. Want to Upgrade?

To: KymarFye who wrote (15129)	2/3/2002 5:43:16 PM
From: Dan Duchardt	Read Replies (2) \| Respond to of 18137

KF, I have yet to hear any satisfying argument that shows that "traders" are chiefly responsible for "what has been going on in the market the last few years." ....In this sense, everyone in the market is a trader, by definition. I think you just made the satisfying argument.<ggg> Actually, I disagree that everyone in the market is a trader, at least from a historical perspective. There is at least theoretically a perspective that companies have an intrinsic value based on what they do or make and the profits they can earn by doing it or making it, and that intrinsic value will grow as the company evolves. Investors are (perhaps were) in the business of risking their money in the belief that a company had a business plan that would succeed, the business would grow, and the company would become more valuable in the future. Many retail "investors" entrusted their money to fund managers, paying them a fee in the belief that they would make more correct decisions than wrong ones about where to put the collective money entrusted to that fund to work. The fact, that you state, that many or most of these fund managers evolved into speculators/traders (and bad ones at that) does nothing to support your argument. In fact, it suggests that their metamorphosis contributed mightily to the bubble and subsequent collapse. Of course they were reacting to the forces of the influx of money, and the heightened expectations to perform, etc, etc. But the bottom line is the market became a place where prudent investments became almost extinct because the vast majority of participants became traders, putting ridiculous amounts of money in the hands of people who had nothing more than an idea to hype. I take it that your point is that a few thousand retail daytraders, controlling relatively small amounts of money, have been wrongfully accused of creating "what has been going on in the market the last few years." I agree with you. I also agree that intraday volatility should mean little or nothing to long-term investors, but the fact is that in many cases intraday, and few-day volatility have grown way out of proportion to the general trend of the market. When stocks start changing price as much in 10 minutes as you would normally expect them to move in a year, or as much in 5 days as you would historically expect them to move in a decade, the environment has become too hostile for investing. None of us have any assurance now that stock prices will be driven by fundamentals instead of the whim of speculators. Investing, at least for now, is a very poor risk. Either you learn to trade and do it well, or you get really lucky, or you get really hurt. Dan