Page 1 of 2 12 LastLast
Results 1 to 9 of 11

Thread: I thought the market knew whats best. Leave the market alone part 2

  1. #1
    Olympic Champ
    Join Date
    Mar 2007
    Location
    On the forums
    Posts
    8,345

    Default I thought the market knew whats best. Leave the market alone part 2

    NEW YORK (AFP) - Bruised Wall Street investors, facing a suddenly weaker economic outlook, pinned their hopes on a Federal Reserve rescue, even as some analysts warn of considerable uncertainty ahead.

    http://news.yahoo.com/s/afp/20070908...y_070908184033
    Last edited by Schlottke; 09-08-2007 at 07:58 PM.

  2. #2

    Default Re: I thought the market knew whats best. Leave the market alone part 2

    Big,

    You try to run and point out that the market is flawed every time it does not increase in value, but let's remember that the market has self-correcting tendencies. It always fluctuates up and down. I don't believe the article is accurate in the judgment that all of Wall Street is pinning its hoped on the FOMC -- the article lists no evidence of that statement. As for myself and others I know and trade with, we would like to see teh FOMS stay out of the situation as much as possible, since it so often sides against stocks.

    Still, the market we're seeing right now is merely a reflection of an over-bought situation. When these transactions were taking place, the sale quantities and prices were not at the intersection point of the supply and demand curves. This market situation is just a reflection of the tendency to come back to equilibrium. There will still be a tomorrow.

    Remember that the market is not a "system." It was not thought of, dreamt of, or conjured as a system. It is just the default human condition -- it's what happens when people are free to choose for themselves. As people get to choose for themselves, everyone comes out wth what they want -- what they chose. Those who made poor choices are dealing with that. Those who made good choices are dealing with that.

  3. #3

    Default Re: I thought the market knew whats best. Leave the market alone part 2

    Is the default human condition you refer to also known as the herd mentality?
    I find it strange that you talk about people making good decisions, which most people would take to mean as investing in value not speculation. Then you turn around and start talking about buying and selling curves and their intersection point which has absollutly nothing to do with value based investing but rather just following the money. Gambling that you can time the herds movement. This is one of the major reasons that the markets are no longer about reaping the results of making good investments because solid companies and funds can get trampled by the herd. Yes some people have made billons doing this and many ,many more are making millions but it has turned the markets into the worlds biggest casinos.

    I remember many millionaire's that went bust when the dot.com bubble burst. We are now sitting on the edge of events that could make that pale by comparison. With the right decisions and policies we might avoid that senerio but one or two miscalulations might set things in motion that no amount of intervention wil stop. We will just have to wait and see.

  4. #4

    Default Re: I thought the market knew whats best. Leave the market alone part 2

    I think the default human condition is much less of a herd mantality. People have rarely ever been known as herders. I think that when you get down to it, people tend to fend for themselves. We have seen it over and over in history. Simply follow the link http://www.businessreform.com/articl...rticleID=11584 to see how William Bradford and the Massachusetts Bay colony found that socialism and the herd mentality did not fare well.

    But, the supply and demand curves are not about money, but about behavior. Understand that human behavior is driven by value -- what will best satisfy one's own values. It may be money, material, or abstract. But all of those still fit into the Keynsian cross of supply and demand. My use of those curves was to help illustrate that the disequilibrium that once existed is being brought back to equilibrium. The evidence of this situation is exactly what is happening now.

    As for value-based investing, I wil submit to you that the majority of investing today is based on value. I don't think that anyone is going into investing with the mindset that he wants to lose money instead of making it. Successful investors know that their investments MUST be grounded in good financial principles. Those who don't follow those principles will lose money. The loss of their money will drive them out of the market or drive them to follow the proper principles, which will eliminate the problem. The dot.com fiasco was a case of people not following sound financial principles. Particular consequences ensued and those people are a bit more aware of their actions with respect to finance.

    As long as individuals are able to freely invest and freely reap the rewards or suffer the consequences of their decisions, we will remain an economic driving force in the world.

  5. #5
    Olympic Champ
    Join Date
    Mar 2007
    Location
    On the forums
    Posts
    8,345

    Default Re: I thought the market knew whats best. Leave the market alone part 2

    People have rarely ever been known as herders.

    Really? Wow!

  6. #6
    Olympic Champ
    Join Date
    Apr 2007
    Location
    It's a long way from East Colorado
    Posts
    3,740

    Default Re: I thought the market knew whats best. Leave the market alone part 2

    skipster again preaching that Jesus (er, uh, the market) saves. Have faith, brothers and sisters!

  7. #7

    Default Re: I thought the market knew whats best. Leave the market alone part 2

    Skipster, am I to believe that you are saying that the mantra of Wall Street is not "follow the money"? Do day traders (and hour and minute traders) not use trading programs that simply folllow the money. Trend trading is BIG and has nothing to do with investing in companies that are good values. Trend traders do not care if they are buying into good companies or bad. They herd the trend and move on when the herd (money) moves on. Many times they leave companies, sectors, and individual investors in a world of hurt. Good value in good companies is lost and could take months or years to recover.

    Your post speaks of successful investors having their investments grounded in good financial principals. Those that lose money did not follow these principals. What are the specifics of these wonderful principals that guarantee wealth to all?

  8. #8

    Default Re: I thought the market knew whats best. Leave the market alone part 2

    When did I say that the market didn't follow money? The market is all about value. One way to express value is with dollar signs. What you are talking about is some abstract concept in which you think that money just floats from one place to another, with a bunch of suits scurrying behind it. That is not the case. Each of those suits has its own idea of investing and what will gain them the most money. They all have different agendas. Some want to make as much money as possible as quickly as possible. Others have a longer timespan and accept less risk. Then, there's everything in between.
    When you say "follow the money," what exactly do you mean?

    Besides, investing is free and personal. You can invest in whatever you want. Perhaps you invest in one company because your uncle works there. Maybe you invest in another because you like what that company does. Professional fund managers usually try to maximize portfolio value within the guidelines of the fund (risk, etc.) They usually will not invest in poorly performing companies or sectors because the value is not as high.

    Your use of the term "good companies" makes one wonder what a good company is. Much of Wall Street doesn't care personally about whatthe company does, who works there, or if the compan is "good," by your definition. They want to see a good balance sheet from a company in an up-and-coming or good performing sector that has a history of growth and an opportunity to increase in the future.

    I think you may be referring to some people who trade by the minute and just trade on the ups and downs. Thes epeople make up a VERY small amount of traders, os their effect is very little. They also hurt themselves more than they affect anyone else.

    As for matclone, why do you have to insert your religious beliefs into a market thread? YOu can start your own thread for religion if you'd like to discuss that. What I am seeing is that you understand so little about how markets work and you refuse to learn. You simply want to make sarcastic remarks, hoping that people will enjoy what you've written. As with other threads, I challenge you to debate the issues with substance instead of sarcasm.

  9. #9
    Olympic Champ
    Join Date
    Apr 2007
    Location
    It's a long way from East Colorado
    Posts
    3,740

    Default Re: I thought the market knew whats best. Leave the market alone part 2

    Quote Originally Posted by skipster View Post
    As with other threads, I challenge you to debate the issues with substance instead of sarcasm.
    Substance begats substance; dishonesty engenders sarcasm.

Posting Permissions

  • You may not post new threads
  • You may not post replies
  • You may not post attachments
  • You may not edit your posts
  •