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I would proffer and different outcome for stock markets, based on the
following assumptions:-
1. Most people would concur that P/E ratios and other traditional valuation
methods are high for large-cap stocks;
2. Day-traders thrive on volatility;
3. Part-timers (e.g. the housewife in the ad) are probably mainly playing
from the long-side;
4. Computational power has brought bank-style analytical techniques to the
"masses";
5. All the good news is in the market, but there's lots of money still
flowing in.
It seems to me that in order to nail the most people (which is what I think
markets tend to do), stocks should move sideways in a narrow range for
several years like they did in the 1960s. This would make life tough for
day-traders, boring & un-profitable for part-timers and allow companies'
earnings to catch up with their stock prices.
Then you'd get a wash-out, liquidity would dry up again and we'd see
articles about the "death of equities" again.
Rus
-----Original Message-----
From: John Niem Jr [mailto:djnj@xxxxxxxxxxxx]
Sent: 03 June 1999 10:15
To: Omega List
Subject: Re: CALLING ALL CONTRARIANS...
If 50% of the "daytraders" are SHORTING stocks. Or 100% of the daytraders
are shorting stocks 50% of the time. Then all this is no contrarian sign of
a market top. The question is, how often are most people shorting stocks
relative to going long?
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