tsptalk
03-19-2004, 11:44 PM
I am copying this from another forum because I thought it might be of interest here...
Someone's comment on when I went into the I fund:
"What a horrible move to the I fund..What were u thinking Tom...? Never mind..I already know..!!!"
This is nota knock on the person who wrote that, nor am I patting my own back because I actually moved from the I fund to the S fund shortly after this, butthe I fund shot up 2.6% in the 4 days following this "What were u thinking" comment. When someone makes a statement like that, someonewho may not understandour (should I speak for myself?) contrarian thinking (buy fear, sell euphoria) it is usually a great sign that the market will go against their comment.
I spent many years trying to trade stocks not understanding this concept. Iwould buy a stock that would go down relentlessly, and just as soon as I couldn't take it any more and sold, it would bouncealmost immediately.I began to read about it and learned that there wasa reason for this. A point comes wheneveryone whowants to sell has sold, there are no more sellers to pull it down anymore. So, if you feel the pain, it's time to buymore! On the other side, when you start calculating profits on a winning trade, it's time to sell because sure as sh*t, it's coming down.
This information could help trim years of confusion for someone new to this. I liken this to buying a stock when you hear good news on a company only to see itdrop. You shake your head in disbelief. That goes along with "Buy on the rumor, sell on the news." The markets are continually humbling andit tends to make people wrong, particularly at tops and bottoms. When something seemsobvious,playing itthe other way is not a bad option.
Again, this post was not to embarrass the original poster or to say I made a good call.But it is a great example of wrong thinking ata market extreme. It is so prevalent that there are web sites that base their market decisionsgoing against public opinion andsentiment. It is a good concept to understand.
Tom
Someone's comment on when I went into the I fund:
"What a horrible move to the I fund..What were u thinking Tom...? Never mind..I already know..!!!"
This is nota knock on the person who wrote that, nor am I patting my own back because I actually moved from the I fund to the S fund shortly after this, butthe I fund shot up 2.6% in the 4 days following this "What were u thinking" comment. When someone makes a statement like that, someonewho may not understandour (should I speak for myself?) contrarian thinking (buy fear, sell euphoria) it is usually a great sign that the market will go against their comment.
I spent many years trying to trade stocks not understanding this concept. Iwould buy a stock that would go down relentlessly, and just as soon as I couldn't take it any more and sold, it would bouncealmost immediately.I began to read about it and learned that there wasa reason for this. A point comes wheneveryone whowants to sell has sold, there are no more sellers to pull it down anymore. So, if you feel the pain, it's time to buymore! On the other side, when you start calculating profits on a winning trade, it's time to sell because sure as sh*t, it's coming down.
This information could help trim years of confusion for someone new to this. I liken this to buying a stock when you hear good news on a company only to see itdrop. You shake your head in disbelief. That goes along with "Buy on the rumor, sell on the news." The markets are continually humbling andit tends to make people wrong, particularly at tops and bottoms. When something seemsobvious,playing itthe other way is not a bad option.
Again, this post was not to embarrass the original poster or to say I made a good call.But it is a great example of wrong thinking ata market extreme. It is so prevalent that there are web sites that base their market decisionsgoing against public opinion andsentiment. It is a good concept to understand.
Tom