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Originally Posted by reckless
I understand that we all use different ways to determine our investments. Same with handicapping the horses -- there is no single road to riches. I am not knocking the chartists at all and I wasn't knocking you, especially since you said stocks are not overpriced.
But my question is why would one put their very own money on the line based on other people's opinions and investments?
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No offense taken.
Are you referring to analysts? I would agree; I never put any stock (pun intended) in their opinions. They are always late to the party. Or are you referring to the charts? In the LONG run, price will be determined by fundamentals, but the charts lead the fundamentals. By the time earnings are released, its old news. We often see stocks sell off after strong earnings, without any negative guidance. The postives are already factored into the price. Word gets out. Insiders exploit. They try to get cute by hiding it in the options markets but those moves are seen as well.
I wasn't a believer in technical analysis until I got buried in 2002. I missed a decent amount of wreckage in the previous 2 years, and thought I was being clever by getting back in. Wrong move. I was a good year too early. The market hadn't fully consolidated in 2002. But like most things in life, we learn from our past mistakes.