At the MarketVision Chronicle, I write about four emotional battles we all face with markets.
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We’ve now had six chronicles on trading concepts:
This week, I’ll speak about a few emotional battles that every participant goes through.
To any market player, most market moves are astounding. They surprise both in the direction and magnitude of the move. Stocks move against your careful analysis, and the first reaction that we get is one of denial. It’s easier, for our brains, to pretend that what we need to happen, is what should happen eventually, so everything against our view seems just fleeting and temporary.
When a stock starts to fall, you hear voices of support that the markets are full of manipulators who are keeping prices low. (Note: there is much more incentive for manipulators to keep prices high, and there are far more instances of market players manipulating to the upside) Even at a broad level, we tend to blame a market fall on FIIs exiting, the crisis in Europe etc. and then, refuse to sell because the India story is still strong.
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Borrowing costs have dropped for Italy and Spain, but this happy state of affairs may not last, because both have substantial bonds still to sell and the ECB may not help.
Every now and then it is easy to forget that the one or two “better than expected” data points blasted by flashing headlines do nothing that merely mask what is an otherwise quite deplorable and deteriorating reality.
Past Short Takes: