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Strategies & Market Trends : Analysis Class for Beginners -- Ignore unavailable to you. Want to Upgrade?

To: Arthur Tang who wrote (637)	10/29/1997 1:15:00 PM
From: Arthur Tang	Read Replies (1) \| Respond to of 1471

How market works? Stocks are all preowned. When money comes into the market, market moves up. When money is taken out of the market, market pulls back. In between though, the blue chip gets the incoming money first. Then the market will broaden. All the small stock will be moving up last. When the market moves up, cash and stock to maintain the market should be about 5-8% of the total market. 5-8% was learned over the years of experience. Any less, the market will suffer a crash. Once a crash comes about, it takes many months to build back to its former height. Unless, the money (401k) continue to come into the market. Today, the price of stock is also evaluated by earnings and P/E ratio. So market is based on the returns of investment. Stock value should not be considered high or low, but fairly valued until the price is chnged. You might get lucky if you can buy the stock discounted.