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Strategies & Market Trends : The Epic American Credit and Bond Bubble Laboratory -- Ignore unavailable to you. Want to Upgrade?

To: andiron who wrote (81237)	4/27/2007 11:32:21 PM
From: redfrecknj	Respond to of 110194

["Grantham says we are now seeing the first worldwide bubble in history covering all asset classes." "The more leverage you take, the better you do; the better you do, the more leverage you take. A critical part of a bubble is the reinforcement you get for your very optimistic view from those around you."] "While it may appear that rising prices in financial assets attract buyers, I believe that there is no such influence. If buying made prices go up and rising price made people buy, we would have a positive feedback loop between prices and investors’ actions. Because trends in prices stop and reverse continually, there can be no reinforcing feedback loop. The Wave Principle suggests that shared mood is endogenous and formological, so there can be no feedback loop on that basis, either. Therefore I conclude that prices are irrelevant to the herding dynamic and do not regulate it. Prices are simply an epiphenomenon of an unconscious, impulsive, subjective valuation. Waxing optimism produces rising prices, and waxing pessimism produces falling prices. That’s all there is to it." Bob Prechter