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| A market tops, the fundamentals are very positive, but the market goes down and keeps going down.
What happened?
Markets look ahead and discount the future. So.......the positive news you are hearing about the market "is already in the market" and you're left taking a considerable trading loss or selling your crop way down from the top. You hung-on and hoped because the fundamentals were positive.
As I said before, one very successful trader calls fundamentals, "funnymentals."
Reminds me of when Alan Greenspan, head of the Federal Reserve, said the stock traders during the previous bull market were exhibiting "irrational exuberance." The stock market kept going on up for about another 2 years after he said that. This was bearish market news from a high place. No matter what people in high places say or what the fundamentals say--THE MARKET IS THE BOSS. Can be very costly to learn this.
Markets can move very contrary to the news or fundamentals. What matters is what they do and are doing, not what they are supposed to do.
Greenspan now has a book out titled: Alan Greenspan, The Age Of Turbulence, Adventures in a new world. He was a friend of philosopher/novelist Ayn Rand who he says was one of the most influentual people in his life. Same is true for my life.
Don
Edited by getitdone1 1/8/2008 11:24
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What happened?
