We would like to remind you of this upcoming event.

Behave yourselves

Date: Sunday, April 1, 2001
Time: 10:15AM CST (GMT-06:00)

Stop talking nonsense!

We would like to remind you of this upcoming event.

Behave yourselves

Date: Sunday, April 1, 2001
Time: 10:15AM CST (GMT-06:00)

Stop talking nonsense!

FYI,
Massive solar flares this week, as markets crash!!! Here we go again.
Just kidding, even though its past April 1st.
Pete

--- A simple-minded reply would be to say before companies were eager
to publish good results as now whispers are bruising from scratch
that they are missing their forecasts and the cies. are unable now to
predict how to come out of this mess.Except lay-offs.
Nobody willing to invest like somebody driving in full fog with
ghosts along the road would stop on the side of the road and wait for
dawn?.!
That is for the "mood".

When the dog got a knock somewhere he might be more carefull,
something like a Pavlovstock aversion.
I leave the top scholars here to tell the economics facts.
So long!





In Behavioral-Finance@y..., pgreenfinch@w... wrote:
> Whodunnit ?
> I already used this title once.
> Attribution is the fact that when something bad happens (we lose
> money, for example), we have to find somebody responsible.
> Of course, when something good happens (we make money, for
example),
> we give the credit to ourselves (self-attribution).
>
> It seems that the game is now:
> Who is responsible for the bear market?
> And the recession risk?
> Of course, there are some classical answers:
>
> - Alan Greenspan (or Wim Duisenberg, or the head of the Bank of
> Japon, this is optional)
> - Wall Street and its brokers (a whorehouse, said Jeff Livermore,
> already in the 20s)
> - Governments (all of them, or some precise ones, this is optional,
> we can even add some supranational bodies and NGOs)
> - Foreign countries (but never our own!)
> - Consultants and other gurus (the "creation of stockholder value"
> paradigm)
> - The Internet start-up model (believing to make money by giving
> something free, and using the magic of stock-options to pay people)
> - Academia and the "modern finance theory" (the higher the risk,
the
> higher the return)
> - Overconfident consumers (getting in debt)
> - Overconfident banks (giving loans)
> - Overconfident pension funds, or retirement systems
> - Overconfident companies (buying more new equipments than they
need
> and getting overleveraged)
> - Overconfident stock investors (hmm, danger here, self-attribution
> is not far)
> - Overconfident media
> - The cosmos (well, ask Prechter!)
> - Technical analysts
> - Fundamental analysts
> - Quantitative analysts
> - Behavioral analysts (is such exist :-)))
>
> But we only scratch the surface, here.
> I am sure we can find more exotic answers!
>
> PG

I've written a book "Seeing Through the Fog" - a guide to investing.
The book is approximately 220pages long and is available at my
website here: http://www.investmentsdirect.com/stories/book.htm

check it out!

Kevin Prag

The Psychology Cycle

It has been a while since I have posted an update, but so far I have
not have had a compelling element to issue an update, my projections
regarding a further DOW slide still stands. We have had a brief rally
late March as the DOW attempted to cross 10000 again, but the attempt
failed leading yet again to another disappointment. The technology
warnings continues at an alarming rate with virtually all the
technology stars, Internet stocks, B2B stocks, networking, fiber
optics, semiconductors and wireless all warning.
The parade of warnings stands to a contrast to apparent stable shape
of the economy, manufacturing picked slightly and retail sales
holding fine, while consumer confidence revered its decline.
The contradiction has a simple explanation in my mind, it is Investor
Psychology, the market through out history has gone through
psychology cycles from ultimate optimism to rock bottom despair,
those cycles hold some connection to the economic cycle, but the
volatility is of such an extent that both cycles seems hardly
related. For example: between 1950 and 1959, the S&P500 earning
growth stood at 16% over that entire period, while the S&P almost
tripled in value*, another striking example is the fact that between
1929 to 1932 the S&P index fail by 81% while real dividends fail by
only 11%. Also between Jan 1973 & December 1974 the S&P index fail by
54% with only 6% drop in dividends during the same period*.
The above is just an example of how the volatility of the market can
go a long way regardless of the underlying fundamentals, the
volatility can go either way from an extreme upside like the
sevenfold in crease in stock prices between 1920 to 1929, compared to
a 3 fold increase in the S&P index earnings*.
At this moment in history I feel we are entering another period of
overreaction following a period of another opposite overreaction,
both periods can be regarded as an example of the psychology cycle
unfolding in both directions.
Based on a survey between I conducted between Feb 2001 to April 2001
of 82 investors, 90% said that they consider fundamental analysis
(50%) or technical analysis (40%) as the most important factor in
their investment decisions. Both camps stand to be disappointed if
the history stands as a guide, hence the market is not reacting to
fundamental or technical factors but rather to a prolonged form of
investors psychology turf that will lead to further declines as
investors gradually escape the carnage, while causing more carnage in
the process.
Having said that the NASDAQ seems to be approaching a bottom, the
NASDAQ is close to a 70% decline from its inter day high of 5132 in
March 2000, but the fact that we are near a bottom does not mean that
we will start a rebound in the near future, the market can remain
stuck within that range for months to come.
I still hold that the DOW should dip under 9000 to 8500 before we can
have a sustainable upside in the market.
It might be odd as a suggestion, but I think the best way to analyze
the market those days is to hire an army of psychologists specialized
in mass psychology, since the stock market appears to be a continues
real life experiment of individual behavior regarding uncertainty
within a group of people with similar conditions. Some might argue
that EMH justify the way the market does react, but many have
questioned the value of EMH, Robert J. Shiller book "Irrational
Exuberance" present some strong justifications against EMH.
According to an article by Pierre Belec on Reuters, Belec referred to
magazine covers as perhaps a good market indicator, Belec is
referring to a one way to measure market psychology.
Humans in nature are irrational agents that get carried away one way
or another regardless of the underlying investment fundamentals,
according to my survey between Feb 2001 to April 2001, out of 72
investors 63% reported that psychology was the reason why they lost
in the stock market rather then a default in their analysis.
It is not my intent to justify behavioral finance in this article, as
there are many experts much better qualified to deal with that
question then I do, it is my attempt is to apply the behavioral
concept to the market today and come out with a useful prediction to
where the market is heading. Fortunately, so far I have been right on
my analysis for the last 6 months, but I still need a longer time
frame to take my approach seriously.  The coming few months will be
interesting, as the divergence between the market and the real
economy becomes more pronounce, the concept of a psychology cycle
might gain more attention.

Nawar ALSAADI
04/04/2001

*. Figures taken from R.J Shiller book "Irrational Exuberance" 2000.

http://www.geocities.com/Nawaralsaadi/Nawarmain.htm

Hi all
I really enjoy that forum very much.very educated and
beneficial group.
I was always facinated by human cycle or repeated
pattern of behavior,so TA was a natural start for me.

If we looked at NASDAQ weekly chart for the last 5
years we will find a very classical Decsending
Triangle with base line at 3000,with 200 weeks MA near
that line,the market heavilly broke both lines,then
after classical about 10% down it returned just to
touch those lines to resume the way back down.The
target is 1000. The market is heading down in
cycles,in each small rally up it just touch one of the
strong  ressistance then move back,3000,2000 the next
target for any move up in 1800.

The same story on Dow, with Head & Shoulder nick line
at about 10000,up at 11500.With the nick line
broken,along with the 200 week MA.Also market returned
short rally touching those lines,then moving back to
an expected target around 8500.

I think using TA pattern is a simple way of anaylsis
and can be naive as well,BUT in some case it can be
very helpful specially analyzing long-run
patterns.Bearing in mind that those pattern represent
a certain mood of psychology and emotion which is by
the way a very interesting subject.
Malek
---



Nawar  <Nawaralsaadi@...> wrote:
> The Psychology Cycle
>
> It has been a while since I have posted an update,
> but so far I have
> not have had a compelling element to issue an
> update, my projections
> regarding a further DOW slide still stands. We have
> had a brief rally
> late March as the DOW attempted to cross 10000
> again, but the attempt
> failed leading yet again to another disappointment.
> The technology
> warnings continues at an alarming rate with
> virtually all the
> technology stars, Internet stocks, B2B stocks,
> networking, fiber
> optics, semiconductors and wireless all warning.
> The parade of warnings stands to a contrast to
> apparent stable shape
> of the economy, manufacturing picked slightly and
> retail sales
> holding fine, while consumer confidence revered its
> decline.
> The contradiction has a simple explanation in my
> mind, it is Investor
> Psychology, the market through out history has gone
> through
> psychology cycles from ultimate optimism to rock
> bottom despair,
> those cycles hold some connection to the economic
> cycle, but the
> volatility is of such an extent that both cycles
> seems hardly
> related. For example: between 1950 and 1959, the
> S&P500 earning
> growth stood at 16% over that entire period, while
> the S&P almost
> tripled in value*, another striking example is the
> fact that between
> 1929 to 1932 the S&P index fail by 81% while real
> dividends fail by
> only 11%. Also between Jan 1973 & December 1974 the
> S&P index fail by
> 54% with only 6% drop in dividends during the same
> period*.
> The above is just an example of how the volatility
> of the market can
> go a long way regardless of the underlying
> fundamentals, the
> volatility can go either way from an extreme upside
> like the
> sevenfold in crease in stock prices between 1920 to
> 1929, compared to
> a 3 fold increase in the S&P index earnings*.
> At this moment in history I feel we are entering
> another period of
> overreaction following a period of another opposite
> overreaction,
> both periods can be regarded as an example of the
> psychology cycle
> unfolding in both directions.
> Based on a survey between I conducted between Feb
> 2001 to April 2001
> of 82 investors, 90% said that they consider
> fundamental analysis
> (50%) or technical analysis (40%) as the most
> important factor in
> their investment decisions. Both camps stand to be
> disappointed if
> the history stands as a guide, hence the market is
> not reacting to
> fundamental or technical factors but rather to a
> prolonged form of
> investors psychology turf that will lead to further
> declines as
> investors gradually escape the carnage, while
> causing more carnage in
> the process.
> Having said that the NASDAQ seems to be approaching
> a bottom, the
> NASDAQ is close to a 70% decline from its inter day
> high of 5132 in
> March 2000, but the fact that we are near a bottom
> does not mean that
> we will start a rebound in the near future, the
> market can remain
> stuck within that range for months to come.
> I still hold that the DOW should dip under 9000 to
> 8500 before we can
> have a sustainable upside in the market.
> It might be odd as a suggestion, but I think the
> best way to analyze
> the market those days is to hire an army of
> psychologists specialized
> in mass psychology, since the stock market appears
> to be a continues
> real life experiment of individual behavior
> regarding uncertainty
> within a group of people with similar conditions.
> Some might argue
> that EMH justify the way the market does react, but
> many have
> questioned the value of EMH, Robert J. Shiller book
> "Irrational
> Exuberance" present some strong justifications
> against EMH.
> According to an article by Pierre Belec on Reuters,
> Belec referred to
> magazine covers as perhaps a good market indicator,
> Belec is
> referring to a one way to measure market psychology.
>
> Humans in nature are irrational agents that get
> carried away one way
> or another regardless of the underlying investment
> fundamentals,
> according to my survey between Feb 2001 to April
> 2001, out of 72
> investors 63% reported that psychology was the
> reason why they lost
> in the stock market rather then a default in their
> analysis.
> It is not my intent to justify behavioral finance in
> this article, as
> there are many experts much better qualified to deal
> with that
> question then I do, it is my attempt is to apply the
> behavioral
> concept to the market today and come out with a
> useful prediction to
> where the market is heading. Fortunately, so far I
> have been right on
> my analysis for the last 6 months, but I still need
> a longer time
> frame to take my approach seriously.  The coming few
> months will be
> interesting, as the divergence between the market
> and the real
> economy becomes more pronounce, the concept of a
> psychology cycle
> might gain more attention.
>
> Nawar ALSAADI
> 04/04/2001
>
> *. Figures taken from R.J Shiller book "Irrational
> Exuberance" 2000.
>
> http://www.geocities.com/Nawaralsaadi/Nawarmain.htm
>
>
>


__________________________________________________
Do You Yahoo!?
Get email at your own domain with Yahoo! Mail.
http://personal.mail.yahoo.com/

--- In Behavioral-Finance@y..., Malek Sultan <maleksul@y...> wrote:

I just received the Psychology of Finance's book ordered through
internet.
I went trough  chapters late at night and it seems to me , the author
educated as an engeneer,has made a synthesis of charts and psychology
through charts (all these japanese candlestick to model the
psychology pattern of the day).
None the less predictability odds are not concerned and resolved by
the study (Hope to read more later).
The real scientists and the empiric so called scientists are not the
same : It's like asking a professor of medicine about the effect of
psychology (Freund analysis , for instance) on a ill-minded one.
I was answered by one of these : "only the pill is effective" (drug).
You can only figure the past but history doesn't come again exactly
the same.
You can feel the result of the day and anticipate some kind of future
moves but your methods are the ones before the electronic microscope
(Can't imagine the complexity of the millions of economics facts
interacting)
The only good strategy is to be contrarian in some way ,because of
the backlag of economical indicators.(past is not relevant)
This is a stupid behaviour of mine.!

> Hi all
> I really enjoy that forum very much.very educated and
> beneficial group.
> I was always facinated by human cycle or repeated
> pattern of behavior,so TA was a natural start for me.
>
> If we looked at NASDAQ weekly chart for the last 5
> years we will find a very classical Decsending
> Triangle with base line at 3000,with 200 weeks MA near
> that line,the market heavilly broke both lines,then
> after classical about 10% down it returned just to
> touch those lines to resume the way back down.The
> target is 1000. The market is heading down in
> cycles,in each small rally up it just touch one of the
> strong  ressistance then move back,3000,2000 the next
> target for any move up in 1800.
>
> The same story on Dow, with Head & Shoulder nick line
> at about 10000,up at 11500.With the nick line
> broken,along with the 200 week MA.Also market returned
> short rally touching those lines,then moving back to
> an expected target around 8500.
>
> I think using TA pattern is a simple way of anaylsis
> and can be naive as well,BUT in some case it can be
> very helpful specially analyzing long-run
> patterns.Bearing in mind that those pattern represent
> a certain mood of psychology and emotion which is by
> the way a very interesting subject.
> Malek
> ---
>
>
>
> Nawar  <Nawaralsaadi@y...> wrote:
> > The Psychology Cycle
> >
> > It has been a while since I have posted an update,
> > but so far I have
> > not have had a compelling element to issue an
> > update, my projections
> > regarding a further DOW slide still stands. We have
> > had a brief rally
> > late March as the DOW attempted to cross 10000
> > again, but the attempt
> > failed leading yet again to another disappointment.
> > The technology
> > warnings continues at an alarming rate with
> > virtually all the
> > technology stars, Internet stocks, B2B stocks,
> > networking, fiber
> > optics, semiconductors and wireless all warning.
> > The parade of warnings stands to a contrast to
> > apparent stable shape
> > of the economy, manufacturing picked slightly and
> > retail sales
> > holding fine, while consumer confidence revered its
> > decline.
> > The contradiction has a simple explanation in my
> > mind, it is Investor
> > Psychology, the market through out history has gone
> > through
> > psychology cycles from ultimate optimism to rock
> > bottom despair,
> > those cycles hold some connection to the economic
> > cycle, but the
> > volatility is of such an extent that both cycles
> > seems hardly
> > related. For example: between 1950 and 1959, the
> > S&P500 earning
> > growth stood at 16% over that entire period, while
> > the S&P almost
> > tripled in value*, another striking example is the
> > fact that between
> > 1929 to 1932 the S&P index fail by 81% while real
> > dividends fail by
> > only 11%. Also between Jan 1973 & December 1974 the
> > S&P index fail by
> > 54% with only 6% drop in dividends during the same
> > period*.
> > The above is just an example of how the volatility
> > of the market can
> > go a long way regardless of the underlying
> > fundamentals, the
> > volatility can go either way from an extreme upside
> > like the
> > sevenfold in crease in stock prices between 1920 to
> > 1929, compared to
> > a 3 fold increase in the S&P index earnings*.
> > At this moment in history I feel we are entering
> > another period of
> > overreaction following a period of another opposite
> > overreaction,
> > both periods can be regarded as an example of the
> > psychology cycle
> > unfolding in both directions.
> > Based on a survey between I conducted between Feb
> > 2001 to April 2001
> > of 82 investors, 90% said that they consider
> > fundamental analysis
> > (50%) or technical analysis (40%) as the most
> > important factor in
> > their investment decisions. Both camps stand to be
> > disappointed if
> > the history stands as a guide, hence the market is
> > not reacting to
> > fundamental or technical factors but rather to a
> > prolonged form of
> > investors psychology turf that will lead to further
> > declines as
> > investors gradually escape the carnage, while
> > causing more carnage in
> > the process.
> > Having said that the NASDAQ seems to be approaching
> > a bottom, the
> > NASDAQ is close to a 70% decline from its inter day
> > high of 5132 in
> > March 2000, but the fact that we are near a bottom
> > does not mean that
> > we will start a rebound in the near future, the
> > market can remain
> > stuck within that range for months to come.
> > I still hold that the DOW should dip under 9000 to
> > 8500 before we can
> > have a sustainable upside in the market.
> > It might be odd as a suggestion, but I think the
> > best way to analyze
> > the market those days is to hire an army of
> > psychologists specialized
> > in mass psychology, since the stock market appears
> > to be a continues
> > real life experiment of individual behavior
> > regarding uncertainty
> > within a group of people with similar conditions.
> > Some might argue
> > that EMH justify the way the market does react, but
> > many have
> > questioned the value of EMH, Robert J. Shiller book
> > "Irrational
> > Exuberance" present some strong justifications
> > against EMH.
> > According to an article by Pierre Belec on Reuters,
> > Belec referred to
> > magazine covers as perhaps a good market indicator,
> > Belec is
> > referring to a one way to measure market psychology.
> >
> > Humans in nature are irrational agents that get
> > carried away one way
> > or another regardless of the underlying investment
> > fundamentals,
> > according to my survey between Feb 2001 to April
> > 2001, out of 72
> > investors 63% reported that psychology was the
> > reason why they lost
> > in the stock market rather then a default in their
> > analysis.
> > It is not my intent to justify behavioral finance in
> > this article, as
> > there are many experts much better qualified to deal
> > with that
> > question then I do, it is my attempt is to apply the
> > behavioral
> > concept to the market today and come out with a
> > useful prediction to
> > where the market is heading. Fortunately, so far I
> > have been right on
> > my analysis for the last 6 months, but I still need
> > a longer time
> > frame to take my approach seriously.  The coming few
> > months will be
> > interesting, as the divergence between the market
> > and the real
> > economy becomes more pronounce, the concept of a
> > psychology cycle
> > might gain more attention.
> >
> > Nawar ALSAADI
> > 04/04/2001
> >
> > *. Figures taken from R.J Shiller book "Irrational
> > Exuberance" 2000.
> >
> > http://www.geocities.com/Nawaralsaadi/Nawarmain.htm
> >
> >
> >
>
>
> __________________________________________________
> Do You Yahoo!?
> Get email at your own domain with Yahoo! Mail.
> http://personal.mail.yahoo.com/

At 12:44 03/04/01 -0400, Pete Locke <plocke@...> wrote:
>Massive solar flares this week, as markets crash!!! Here we go again.

Sure, I knew he was right all along, but wanted to keep it to myself. <VBG>

Martin

Nawar-

Did you reach your conclusions [regarding targets for the NAZ and
DOW] via technical or fundemental methods.

Just curious.

-RNM




~~~~~~~~~~~

>Both camps stand to be disappointed if
> the history stands as a guide, hence the market is not reacting to
> fundamental or technical factors



> the process.
> Having said that the NASDAQ seems to be approaching a bottom, the
> NASDAQ is close to a 70% decline from its inter day high of 5132 in
> March 2000, but the fact that we are near a bottom does not mean
that
> we will start a rebound in the near future, the market can remain
> stuck within that range for months to come.
> I still hold that the DOW should dip under 9000 to 8500 before we
can
> have a sustainable upside in the market.

>
> Nawar ALSAADI
> 04/04/2001

--- info@... wrote:
> --- In Behavioral-Finance@y..., Malek Sultan
> <maleksul@y...> wrote:
Histoty do not repeat itself.I agree,but is the
past,present and the future similar.I think so.
Take two human beings onewho lived 200 years ago in
Africa and the other lives now say in France.How they
cry,laugh,react to fire or pain,,,etc. lots of
emotions and reactions willbe basiclly the same
although the huge differences between the two.
  So using charts is a way trying to depict the
repeated emotional reactions to similar stimulus.I do
not know much about the American capital market
history,but if you looked to the 20s you will find
hundreds of companies all start with the word
Auto[Internet]pleae look to the chart and tell me do
not you see a obvious similarity.
I am from Egypt,a company that has a capital market
[ya we have a stock market there!!!]the first Mobile
company in the country had an IPO,exactly the cycle of
the Internet stock,and VERY surprisingly a chart that
is very similar to NASDAQ,first there is no much moves
but small rounds up,then the jumps starts getting
wider and wider,then the jump become very steep to the
upward,but the correction is tough,but the market
return to high a again,in this period a descending
triangle is made,the market start the real down move
after the nick line break.
  There is a nice book called The Craft of Investing by
John Train,simple and easy book but the part titled
The Market Cycles and Its Chorus could be bery helpful
explaing the cycles I am talking about.
Malek
> I just received the Psychology of Finance's book
> ordered through
> internet.
> I went trough  chapters late at night and it seems
> to me , the author
> educated as an engeneer,has made a synthesis of
> charts and psychology
> through charts (all these japanese candlestick to
> model the
> psychology pattern of the day).
> None the less predictability odds are not concerned
> and resolved by
> the study (Hope to read more later).
> The real scientists and the empiric so called
> scientists are not the
> same : It's like asking a professor of medicine
> about the effect of
> psychology (Freund analysis , for instance) on a
> ill-minded one.
> I was answered by one of these : "only the pill is
> effective" (drug).
> You can only figure the past but history doesn't
> come again exactly
> the same.
> You can feel the result of the day and anticipate
> some kind of future
> moves but your methods are the ones before the
> electronic microscope
> (Can't imagine the complexity of the millions of
> economics facts
> interacting)
> The only good strategy is to be contrarian in some
> way ,because of
> the backlag of economical indicators.(past is not
> relevant)
> This is a stupid behaviour of mine.!
>
> > Hi all
> > I really enjoy that forum very much.very educated
> and
> > beneficial group.
> > I was always facinated by human cycle or repeated
> > pattern of behavior,so TA was a natural start for
> me.
> >
> > If we looked at NASDAQ weekly chart for the last 5
> > years we will find a very classical Decsending
> > Triangle with base line at 3000,with 200 weeks MA
> near
> > that line,the market heavilly broke both
> lines,then
> > after classical about 10% down it returned just to
> > touch those lines to resume the way back down.The
> > target is 1000. The market is heading down in
> > cycles,in each small rally up it just touch one of
> the
> > strong  ressistance then move back,3000,2000 the
> next
> > target for any move up in 1800.
> >
> > The same story on Dow, with Head & Shoulder nick
> line
> > at about 10000,up at 11500.With the nick line
> > broken,along with the 200 week MA.Also market
> returned
> > short rally touching those lines,then moving back
> to
> > an expected target around 8500.
> >
> > I think using TA pattern is a simple way of
> anaylsis
> > and can be naive as well,BUT in some case it can
> be
> > very helpful specially analyzing long-run
> > patterns.Bearing in mind that those pattern
> represent
> > a certain mood of psychology and emotion which is
> by
> > the way a very interesting subject.
> > Malek
> > ---
> >
> >
> >
> > Nawar  <Nawaralsaadi@y...> wrote:
> > > The Psychology Cycle
> > >
> > > It has been a while since I have posted an
> update,
> > > but so far I have
> > > not have had a compelling element to issue an
> > > update, my projections
> > > regarding a further DOW slide still stands. We
> have
> > > had a brief rally
> > > late March as the DOW attempted to cross 10000
> > > again, but the attempt
> > > failed leading yet again to another
> disappointment.
> > > The technology
> > > warnings continues at an alarming rate with
> > > virtually all the
> > > technology stars, Internet stocks, B2B stocks,
> > > networking, fiber
> > > optics, semiconductors and wireless all warning.
>
> > > The parade of warnings stands to a contrast to
> > > apparent stable shape
> > > of the economy, manufacturing picked slightly
> and
> > > retail sales
> > > holding fine, while consumer confidence revered
> its
> > > decline.
> > > The contradiction has a simple explanation in my
> > > mind, it is Investor
> > > Psychology, the market through out history has
> gone
> > > through
> > > psychology cycles from ultimate optimism to rock
> > > bottom despair,
> > > those cycles hold some connection to the
> economic
> > > cycle, but the
> > > volatility is of such an extent that both cycles
> > > seems hardly
> > > related. For example: between 1950 and 1959, the
> > > S&P500 earning
> > > growth stood at 16% over that entire period,
> while
> > > the S&P almost
> > > tripled in value*, another striking example is
> the
> > > fact that between
> > > 1929 to 1932 the S&P index fail by 81% while
> real
> > > dividends fail by
> > > only 11%. Also between Jan 1973 & December 1974
> the
> > > S&P index fail by
> > > 54% with only 6% drop in dividends during the
> same
> > > period*.
> > > The above is just an example of how the
> volatility
> > > of the market can
> > > go a long way regardless of the underlying
> > > fundamentals, the
> > > volatility can go either way from an extreme
> upside
> > > like the
> > > sevenfold in crease in stock prices between 1920
> to
> > > 1929, compared to
> > > a 3 fold increase in the S&P index earnings*.
> > > At this moment in history I feel we are entering
> > > another period of
> > > overreaction following a period of another
> opposite
> > > overreaction,
> > > both periods can be regarded as an example of
> the
> > > psychology cycle
> > > unfolding in both directions.
> > > Based on a survey between I conducted between
> Feb
> > > 2001 to April 2001
> > > of 82 investors, 90% said that they consider
> > > fundamental analysis
> > > (50%) or technical analysis (40%) as the most
> > > important factor in
> > > their investment decisions. Both camps stand to
> be
> > > disappointed if
> > > the history stands as a guide, hence the market
> is
> > > not reacting to
> > > fundamental or technical factors but rather to a
> > > prolonged form of
> > > investors psychology turf that will lead to
> further
> > > declines as
> > > investors gradually escape the carnage, while
> > > causing more carnage in
> > > the process.
> > > Having said that the NASDAQ seems to be
> approaching
> > > a bottom, the
> > > NASDAQ is close to a 70% decline from its inter
> day
> > > high of 5132 in
> > > March 2000, but the fact that we are near a
> bottom
> > > does not mean that
> > > we will start a rebound in the near future, the
> > > market can remain
> > > stuck within that range for months to come.
> > > I still hold that the DOW should dip under 9000
> to
>
=== message truncated ===


__________________________________________________
Do You Yahoo!?
Get email at your own domain with Yahoo! Mail.
http://personal.mail.yahoo.com/

--- In Behavioral-Finance@y..., Malek Sultan <maleksul@y...> wrote:
I disagree with you not on human being the same at the roots, except
some cultural diferences from on country to another, but AT is not
enough to explain every move of securities .In no way predictive but
if millions of people follow the At then the impact could be
devatating whatever move's direction.
Simple non predictible economics facts are the judges of stocks' price
at the end.
Momentum trading is an artefact some kind of cheating with the real
value of securities.
I understand people fan with AT but on the long run except some gurus
selling their books i am convinced the outcome is miserable.!


>
> --- info@s... wrote:
> > --- In Behavioral-Finance@y..., Malek Sultan
> > <maleksul@y...> wrote:
> Histoty do not repeat itself.I agree,but is the
> past,present and the future similar.I think so.
> Take two human beings onewho lived 200 years ago in
> Africa and the other lives now say in France.How they
> cry,laugh,react to fire or pain,,,etc. lots of
> emotions and reactions willbe basiclly the same
> although the huge differences between the two.
>  So using charts is a way trying to depict the
> repeated emotional reactions to similar stimulus.I do
> not know much about the American capital market
> history,but if you looked to the 20s you will find
> hundreds of companies all start with the word
> Auto[Internet]pleae look to the chart and tell me do
> not you see a obvious similarity.
> I am from Egypt,a company that has a capital market
> [ya we have a stock market there!!!]the first Mobile
> company in the country had an IPO,exactly the cycle of
> the Internet stock,and VERY surprisingly a chart that
> is very similar to NASDAQ,first there is no much moves
> but small rounds up,then the jumps starts getting
> wider and wider,then the jump become very steep to the
> upward,but the correction is tough,but the market
> return to high a again,in this period a descending
> triangle is made,the market start the real down move
> after the nick line break.
>  There is a nice book called The Craft of Investing by
> John Train,simple and easy book but the part titled
> The Market Cycles and Its Chorus could be bery helpful
> explaing the cycles I am talking about.
> Malek
> > I just received the Psychology of Finance's book
> > ordered through
> > internet.
> > I went trough  chapters late at night and it seems
> > to me , the author
> > educated as an engeneer,has made a synthesis of
> > charts and psychology
> > through charts (all these japanese candlestick to
> > model the
> > psychology pattern of the day).
> > None the less predictability odds are not concerned
> > and resolved by
> > the study (Hope to read more later).
> > The real scientists and the empiric so called
> > scientists are not the
> > same : It's like asking a professor of medicine
> > about the effect of
> > psychology (Freund analysis , for instance) on a
> > ill-minded one.
> > I was answered by one of these : "only the pill is
> > effective" (drug).
> > You can only figure the past but history doesn't
> > come again exactly
> > the same.
> > You can feel the result of the day and anticipate
> > some kind of future
> > moves but your methods are the ones before the
> > electronic microscope
> > (Can't imagine the complexity of the millions of
> > economics facts
> > interacting)
> > The only good strategy is to be contrarian in some
> > way ,because of
> > the backlag of economical indicators.(past is not
> > relevant)
> > This is a stupid behaviour of mine.!
> >
> > > Hi all
> > > I really enjoy that forum very much.very educated
> > and
> > > beneficial group.
> > > I was always facinated by human cycle or repeated
> > > pattern of behavior,so TA was a natural start for
> > me.
> > >
> > > If we looked at NASDAQ weekly chart for the last 5
> > > years we will find a very classical Decsending
> > > Triangle with base line at 3000,with 200 weeks MA
> > near
> > > that line,the market heavilly broke both
> > lines,then
> > > after classical about 10% down it returned just to
> > > touch those lines to resume the way back down.The
> > > target is 1000. The market is heading down in
> > > cycles,in each small rally up it just touch one of
> > the
> > > strong  ressistance then move back,3000,2000 the
> > next
> > > target for any move up in 1800.
> > >
> > > The same story on Dow, with Head & Shoulder nick
> > line
> > > at about 10000,up at 11500.With the nick line
> > > broken,along with the 200 week MA.Also market
> > returned
> > > short rally touching those lines,then moving back
> > to
> > > an expected target around 8500.
> > >
> > > I think using TA pattern is a simple way of
> > anaylsis
> > > and can be naive as well,BUT in some case it can
> > be
> > > very helpful specially analyzing long-run
> > > patterns.Bearing in mind that those pattern
> > represent
> > > a certain mood of psychology and emotion which is
> > by
> > > the way a very interesting subject.
> > > Malek
> > > ---
> > >
> > >
> > >
> > > Nawar  <Nawaralsaadi@y...> wrote:
> > > > The Psychology Cycle
> > > >
> > > > It has been a while since I have posted an
> > update,
> > > > but so far I have
> > > > not have had a compelling element to issue an
> > > > update, my projections
> > > > regarding a further DOW slide still stands. We
> > have
> > > > had a brief rally
> > > > late March as the DOW attempted to cross 10000
> > > > again, but the attempt
> > > > failed leading yet again to another
> > disappointment.
> > > > The technology
> > > > warnings continues at an alarming rate with
> > > > virtually all the
> > > > technology stars, Internet stocks, B2B stocks,
> > > > networking, fiber
> > > > optics, semiconductors and wireless all warning.
> >
> > > > The parade of warnings stands to a contrast to
> > > > apparent stable shape
> > > > of the economy, manufacturing picked slightly
> > and
> > > > retail sales
> > > > holding fine, while consumer confidence revered
> > its
> > > > decline.
> > > > The contradiction has a simple explanation in my
> > > > mind, it is Investor
> > > > Psychology, the market through out history has
> > gone
> > > > through
> > > > psychology cycles from ultimate optimism to rock
> > > > bottom despair,
> > > > those cycles hold some connection to the
> > economic
> > > > cycle, but the
> > > > volatility is of such an extent that both cycles
> > > > seems hardly
> > > > related. For example: between 1950 and 1959, the
> > > > S&P500 earning
> > > > growth stood at 16% over that entire period,
> > while
> > > > the S&P almost
> > > > tripled in value*, another striking example is
> > the
> > > > fact that between
> > > > 1929 to 1932 the S&P index fail by 81% while
> > real
> > > > dividends fail by
> > > > only 11%. Also between Jan 1973 & December 1974
> > the
> > > > S&P index fail by
> > > > 54% with only 6% drop in dividends during the
> > same
> > > > period*.
> > > > The above is just an example of how the
> > volatility
> > > > of the market can
> > > > go a long way regardless of the underlying
> > > > fundamentals, the
> > > > volatility can go either way from an extreme
> > upside
> > > > like the
> > > > sevenfold in crease in stock prices between 1920
> > to
> > > > 1929, compared to
> > > > a 3 fold increase in the S&P index earnings*.
> > > > At this moment in history I feel we are entering
> > > > another period of
> > > > overreaction following a period of another
> > opposite
> > > > overreaction,
> > > > both periods can be regarded as an example of
> > the
> > > > psychology cycle
> > > > unfolding in both directions.
> > > > Based on a survey between I conducted between
> > Feb
> > > > 2001 to April 2001
> > > > of 82 investors, 90% said that they consider
> > > > fundamental analysis
> > > > (50%) or technical analysis (40%) as the most
> > > > important factor in
> > > > their investment decisions. Both camps stand to
> > be
> > > > disappointed if
> > > > the history stands as a guide, hence the market
> > is
> > > > not reacting to
> > > > fundamental or technical factors but rather to a
> > > > prolonged form of
> > > > investors psychology turf that will lead to
> > further
> > > > declines as
> > > > investors gradually escape the carnage, while
> > > > causing more carnage in
> > > > the process.
> > > > Having said that the NASDAQ seems to be
> > approaching
> > > > a bottom, the
> > > > NASDAQ is close to a 70% decline from its inter
> > day
> > > > high of 5132 in
> > > > March 2000, but the fact that we are near a
> > bottom
> > > > does not mean that
> > > > we will start a rebound in the near future, the
> > > > market can remain
> > > > stuck within that range for months to come.
> > > > I still hold that the DOW should dip under 9000
> > to
> >
> === message truncated ===
>
>
> __________________________________________________
> Do You Yahoo!?
> Get email at your own domain with Yahoo! Mail.
> http://personal.mail.yahoo.com/

TA is not intended to explain every move in
securities[you disagree in that with me although I
never said that] TA is a tool that help identify human
patterns in dealing with financial assets.
You said simple non prdective economic data are the
judge of the stock price.So how could you explain the
existence of a TREND wjether up or down,in your
rational it means in each point of the trend there
must be a new information,which of course not true.
Psychological decision making theory imply people take
time to correctly absorb and process new
information,never the less they first react fast based
on first impression.This lead to more than one point
of time in which theoe new information will be
considered in determing the price.And with more people
coming to a prticular stock taking that info in
consideration,although theoriticaaly its effect is
over,momentum happen and creates TREND.This leads to
underestimation of new information in the early
begining and overestimation near the end.Again cycle
in which TA is just trying to depicit using BF
concepts.
And if you agree with me that human beings arte
basiclly similart in emotional reaction,so why a
pattern discovered by a Japanese rice trader 150 years
ago,may not be helpful for me depict the current
pattern.
Malek
--- info@... wrote:
> --- In Behavioral-Finance@y..., Malek Sultan
> <maleksul@y...> wrote:
> I disagree with you not on human being the same at
> the roots, except
> some cultural diferences from on country to another,
> but AT is not
> enough to explain every move of securities .In no
> way predictive but
> if millions of people follow the At then the impact
> could be
> devatating whatever move's direction.
> Simple non predictible economics facts are the
> judges of stocks' price
> at the end.
> Momentum trading is an artefact some kind of
> cheating with the real
> value of securities.
> I understand people fan with AT but on the long run
> except some gurus
> selling their books i am convinced the outcome is
> miserable.!
>
>
> >
> > --- info@s... wrote:
> > > --- In Behavioral-Finance@y..., Malek Sultan
> > > <maleksul@y...> wrote:
> > Histoty do not repeat itself.I agree,but is the
> > past,present and the future similar.I think so.
> > Take two human beings onewho lived 200 years ago
> in
> > Africa and the other lives now say in France.How
> they
> > cry,laugh,react to fire or pain,,,etc. lots of
> > emotions and reactions willbe basiclly the same
> > although the huge differences between the two.
> >  So using charts is a way trying to depict the
> > repeated emotional reactions to similar stimulus.I
> do
> > not know much about the American capital market
> > history,but if you looked to the 20s you will find
> > hundreds of companies all start with the word
> > Auto[Internet]pleae look to the chart and tell me
> do
> > not you see a obvious similarity.
> > I am from Egypt,a company that has a capital
> market
> > [ya we have a stock market there!!!]the first
> Mobile
> > company in the country had an IPO,exactly the
> cycle of
> > the Internet stock,and VERY surprisingly a chart
> that
> > is very similar to NASDAQ,first there is no much
> moves
> > but small rounds up,then the jumps starts getting
> > wider and wider,then the jump become very steep to
> the
> > upward,but the correction is tough,but the market
> > return to high a again,in this period a descending
> > triangle is made,the market start the real down
> move
> > after the nick line break.
> >  There is a nice book called The Craft of
> Investing by
> > John Train,simple and easy book but the part
> titled
> > The Market Cycles and Its Chorus could be bery
> helpful
> > explaing the cycles I am talking about.
> > Malek
> > > I just received the Psychology of Finance's book
> > > ordered through
> > > internet.
> > > I went trough  chapters late at night and it
> seems
> > > to me , the author
> > > educated as an engeneer,has made a synthesis of
> > > charts and psychology
> > > through charts (all these japanese candlestick
> to
> > > model the
> > > psychology pattern of the day).
> > > None the less predictability odds are not
> concerned
> > > and resolved by
> > > the study (Hope to read more later).
> > > The real scientists and the empiric so called
> > > scientists are not the
> > > same : It's like asking a professor of medicine
> > > about the effect of
> > > psychology (Freund analysis , for instance) on a
> > > ill-minded one.
> > > I was answered by one of these : "only the pill
> is
> > > effective" (drug).
> > > You can only figure the past but history doesn't
> > > come again exactly
> > > the same.
> > > You can feel the result of the day and
> anticipate
> > > some kind of future
> > > moves but your methods are the ones before the
> > > electronic microscope
> > > (Can't imagine the complexity of the millions of
> > > economics facts
> > > interacting)
> > > The only good strategy is to be contrarian in
> some
> > > way ,because of
> > > the backlag of economical indicators.(past is
> not
> > > relevant)
> > > This is a stupid behaviour of mine.!
> > >
> > > > Hi all
> > > > I really enjoy that forum very much.very
> educated
> > > and
> > > > beneficial group.
> > > > I was always facinated by human cycle or
> repeated
> > > > pattern of behavior,so TA was a natural start
> for
> > > me.
> > > >
> > > > If we looked at NASDAQ weekly chart for the
> last 5
> > > > years we will find a very classical Decsending
> > > > Triangle with base line at 3000,with 200 weeks
> MA
> > > near
> > > > that line,the market heavilly broke both
> > > lines,then
> > > > after classical about 10% down it returned
> just to
> > > > touch those lines to resume the way back
> down.The
> > > > target is 1000. The market is heading down in
> > > > cycles,in each small rally up it just touch
> one of
> > > the
> > > > strong  ressistance then move back,3000,2000
> the
> > > next
> > > > target for any move up in 1800.
> > > >
> > > > The same story on Dow, with Head & Shoulder
> nick
> > > line
> > > > at about 10000,up at 11500.With the nick line
> > > > broken,along with the 200 week MA.Also market
> > > returned
> > > > short rally touching those lines,then moving
> back
> > > to
> > > > an expected target around 8500.
> > > >
> > > > I think using TA pattern is a simple way of
> > > anaylsis
> > > > and can be naive as well,BUT in some case it
> can
> > > be
> > > > very helpful specially analyzing long-run
> > > > patterns.Bearing in mind that those pattern
> > > represent
> > > > a certain mood of psychology and emotion which
> is
> > > by
> > > > the way a very interesting subject.
> > > > Malek
> > > > ---
> > > >
> > > >
> > > >
> > > > Nawar  <Nawaralsaadi@y...> wrote:
> > > > > The Psychology Cycle
> > > > >
> > > > > It has been a while since I have posted an
> > > update,
> > > > > but so far I have
> > > > > not have had a compelling element to issue
> an
> > > > > update, my projections
> > > > > regarding a further DOW slide still stands.
> We
> > > have
> > > > > had a brief rally
> > > > > late March as the DOW attempted to cross
> 10000
> > > > > again, but the attempt
> > > > > failed leading yet again to another
> > > disappointment.
> > > > > The technology
> > > > > warnings continues at an alarming rate with
> > > > > virtually all the
> > > > > technology stars, Internet stocks, B2B
> stocks,
> > > > > networking, fiber
> > > > > optics, semiconductors and wireless all
> warning.
>
=== message truncated ===


__________________________________________________
Do You Yahoo!?
Get email at your own domain with Yahoo! Mail.
http://personal.mail.yahoo.com/

Robert,

I usually use fundmentals in my projections, but actually based to
the article I have published I was using BF (behavioral finance as my
guide), I am trying to appley BF as a market analysis tool, I don't
wanna just spend my time studying BF as an acadmic concept. I am glad
the NASDAQ has rebounded today, as I predicted we have hit a bottom
(psychologically speaking!), but I think we will still trade in a
tight range before we really take off again. The DOW is harder to
deal with since my speciality is Tech. stocks, but I still think it
has further downside compared to the NAZ.

Nawar


--- In Behavioral-Finance@y..., "Robert Marley" <smokegreenbuds@y...>
wrote:
> Nawar-
>
> Did you reach your conclusions [regarding targets for the NAZ and
> DOW] via technical or fundemental methods.
>
> Just curious.
>
> -RNM
>
>
>
>
> ~~~~~~~~~~~
>
> >Both camps stand to be disappointed if
> > the history stands as a guide, hence the market is not reacting
to
> > fundamental or technical factors
>
>
>
> > the process.
> > Having said that the NASDAQ seems to be approaching a bottom, the
> > NASDAQ is close to a 70% decline from its inter day high of 5132
in
> > March 2000, but the fact that we are near a bottom does not mean
> that
> > we will start a rebound in the near future, the market can remain
> > stuck within that range for months to come.
> > I still hold that the DOW should dip under 9000 to 8500 before we
> can
> > have a sustainable upside in the market.
>
> >
> > Nawar ALSAADI
> > 04/04/2001

Hi Nawar
I wonder how you could use BF to say that the market
reached a psychological bottom.Was there any
indicators that helped you do that.By the way I still
believe the NASDAQ still has some good way down.
But what actually happened today realy surprised me,it
is as people were waiting for any sign of good news,or
any news that can be percieved to be good.So just DELL
meeting the reduced analyst expectation was enough to
push the market about 10%, that was very intersting.I
hopwe if you could helpe understand the puzzle.
Thank you very much.
Malek
--- Nawar  <Nawaralsaadi@...> wrote:
> Robert,
>
> I usually use fundmentals in my projections, but
> actually based to
> the article I have published I was using BF
> (behavioral finance as my
> guide), I am trying to appley BF as a market
> analysis tool, I don't
> wanna just spend my time studying BF as an acadmic
> concept. I am glad
> the NASDAQ has rebounded today, as I predicted we
> have hit a bottom
> (psychologically speaking!), but I think we will
> still trade in a
> tight range before we really take off again. The DOW
> is harder to
> deal with since my speciality is Tech. stocks, but I
> still think it
> has further downside compared to the NAZ.
>
> Nawar
>
>
> --- In Behavioral-Finance@y..., "Robert Marley"
> <smokegreenbuds@y...>
> wrote:
> > Nawar-
> >
> > Did you reach your conclusions [regarding targets
> for the NAZ and
> > DOW] via technical or fundemental methods.
> >
> > Just curious.
> >
> > -RNM
> >
> >
> >
> >
> > ~~~~~~~~~~~
> >
> > >Both camps stand to be disappointed if
> > > the history stands as a guide, hence the market
> is not reacting
> to
> > > fundamental or technical factors
> >
> >
> >
> > > the process.
> > > Having said that the NASDAQ seems to be
> approaching a bottom, the
> > > NASDAQ is close to a 70% decline from its inter
> day high of 5132
> in
> > > March 2000, but the fact that we are near a
> bottom does not mean
> > that
> > > we will start a rebound in the near future, the
> market can remain
> > > stuck within that range for months to come.
> > > I still hold that the DOW should dip under 9000
> to 8500 before we
> > can
> > > have a sustainable upside in the market.
> >
> > >
> > > Nawar ALSAADI
> > > 04/04/2001
>
>


__________________________________________________
Do You Yahoo!?
Get email at your own domain with Yahoo! Mail.
http://personal.mail.yahoo.com/

It is actually hard to point to a certain indicator that might
explain the level of psychology, my best indicator is of course the
level of the NASDAQ. I would not use technical analysis as such
since, I think circumstances changes over time and situations are
different. Basically I was trying to judge three things to predict a
NASDAQ bottom:

1. Economic Activity: The economic numbers have not been as many
people feared in the last 2 weeks, that certainly was an important
factor in reshaping people expectations from deep gloom, to a higher
state of confidence.

2. The level of the NASDAQ & Tech. Stars like Cisco: Cisco did dip
under 100 billion created the feeling of a real bargain. The market
also have had certain rumors about Lucent bankruptcy, and the LU
actually traded down on that non sense, just another example of
people at such a stage of despair that u can sell them any story,
just like the opposite in march 2000 when any hint of a good news for
a company no matter how outrageous would make it rally upward.

3. The Media & the investors I talk to, almost everybody in a state
of no hope, they are all seeing further downside, and giving up on
stocks. The bond market has been on the rise ever since and
volatility premiums on options are so high showing the present high
level of fear.


Nevertheless having said the above, you might think we maybe have had
similar conditions few months ago, but I still think there is a fine
line when it comes to psychology. Exactly like the DELL news, this
same news would have meant nothing few months ago, but the selling
bonanza was reaching an exhaustion point & DELL easily tipped the
balance to the other proving that we have hit a psychological bottom
on the NASDAQ.
I hope in the future to be able to draw certain lines that easily
identifiable, but so far it is an on going experiment to judge my own
judgment! regarding psychology…and I might just have been lucky so
far.

Nawar









--- In Behavioral-Finance@y..., Malek Sultan <maleksul@y...> wrote:
> Hi Nawar
> I wonder how you could use BF to say that the market
> reached a psychological bottom.Was there any
> indicators that helped you do that.By the way I still
> believe the NASDAQ still has some good way down.
> But what actually happened today realy surprised me,it
> is as people were waiting for any sign of good news,or
> any news that can be percieved to be good.So just DELL
> meeting the reduced analyst expectation was enough to
> push the market about 10%, that was very intersting.I
> hopwe if you could helpe understand the puzzle.
> Thank you very much.
> Malek
> --- Nawar  <Nawaralsaadi@y...> wrote:
> > Robert,
> >
> > I usually use fundmentals in my projections, but
> > actually based to
> > the article I have published I was using BF
> > (behavioral finance as my
> > guide), I am trying to appley BF as a market
> > analysis tool, I don't
> > wanna just spend my time studying BF as an acadmic
> > concept. I am glad
> > the NASDAQ has rebounded today, as I predicted we
> > have hit a bottom
> > (psychologically speaking!), but I think we will
> > still trade in a
> > tight range before we really take off again. The DOW
> > is harder to
> > deal with since my speciality is Tech. stocks, but I
> > still think it
> > has further downside compared to the NAZ.
> >
> > Nawar
> >
> >
> > --- In Behavioral-Finance@y..., "Robert Marley"
> > <smokegreenbuds@y...>
> > wrote:
> > > Nawar-
> > >
> > > Did you reach your conclusions [regarding targets
> > for the NAZ and
> > > DOW] via technical or fundemental methods.
> > >
> > > Just curious.
> > >
> > > -RNM
> > >
> > >
> > >
> > >
> > > ~~~~~~~~~~~
> > >
> > > >Both camps stand to be disappointed if
> > > > the history stands as a guide, hence the market
> > is not reacting
> > to
> > > > fundamental or technical factors
> > >
> > >
> > >
> > > > the process.
> > > > Having said that the NASDAQ seems to be
> > approaching a bottom, the
> > > > NASDAQ is close to a 70% decline from its inter
> > day high of 5132
> > in
> > > > March 2000, but the fact that we are near a
> > bottom does not mean
> > > that
> > > > we will start a rebound in the near future, the
> > market can remain
> > > > stuck within that range for months to come.
> > > > I still hold that the DOW should dip under 9000
> > to 8500 before we
> > > can
> > > > have a sustainable upside in the market.
> > >
> > > >
> > > > Nawar ALSAADI
> > > > 04/04/2001
> >
> >
>
>
> __________________________________________________
> Do You Yahoo!?
> Get email at your own domain with Yahoo! Mail.
> http://personal.mail.yahoo.com/

This time, it is different!

How many times have we heard this sentence as the market hit new
highs?, investors inspired by new technology, new economy, more
efficiency and so on, push valuations to unprecedented levels while
attempting to justify them with the new era slogan. The 1920s mania
regarding the a host of new technology inventions, new scientific
management and better macro economic management presents a perfect
example. It is at the period that Black Fisher one of the most
respected economist of the time predicted that stock prices have
achieved a "permanently high plateau", and the same stands for
virtually most cycles of investment optimism: it is this feeling of
new era is born.
This time I am going to talk about a new concept of the new era
feeling, I am going to mention a another phenomena that is exactly
the same in essence but with power toward the other direction. This
phenomenon is the feeling that this sell off is different. The fact
that we are entering a period of perpetual gloom and gloom that it
will last for years to come, equally justified by a host of logical
explanations. One of the explanations given by the doom predictors is
the market has hit some extreme historical highs and as a result, the
sell off is a new reaction to an unprecedented situation, thus it is
a new gloom era, a different era.
During the recession and the stock market slump of the early to mid
70s, investors coined the term "stagflation" and predicted that we
have entered a new era of lasting gloom with no exit in sight, as
indicated by a speech given by Mr.Stein head of Dryfus of the time to
Harvard business school where he outlined that all methods of
security analysis have became irrelevant as we entered a new era of
scarcity.
The stock market has this tendency to overshoot and undershoot around
a moving equilibrium point, when you look at the fundamentals of a
company like GE you notice that concept of new era does not apply on
the upside or on the downside, the company has been growing
consistently regardless of new eras in either direction.
  A crucial mistake committed by the masses it is the need to classify
short term event as new eras as if we are living in a privileged
moment in history, new trends and new eras take longer then few years
to have it their effects. The Internet for example existed for more
then 30 years and it took all this time for the Internet to gain its
present role. It is the same when you deal with environmental or
demographic factors, human activity causing the greenhouse effect has
taken more then 150 years to cause a truly new paradigm, it has been
in the making since the industrial revolution.
But unfortunately the practice of classifying short term developments
as having a major economic, political and social impact that justify
major changes in stock prices is baseless. Almost virtually all-major
trends take a very long time to materialize, for example the decoding
of the human genome have the potentiality to martially change life as
we know it, but will not have it new impact until 10, 20 or 30 years
down the road, and it is likely the change will be gradual with major
developments unfolding through time.
What I am trying to do is not to undermine the importance of new
inventions and new knowledge, but I am trying to spread its benefits
and disadvantages through out a long period of time, more in line on
how actual events unfold.
There is no exact moment in time that can be defined as totally new,
since all the knowledge in that moment is a product of human
knowledge as long as humanity existed, hence the sudden surge in
economic values in response to new developments is temporary over
reaction to the upside or the down side.
Investors and people in general do not have the capacity to look too
far down in the future, our brains are not qualified or designed to
attain this level of knowledge to truly value the future, people
attention has a relatively short term span. This short term span is
an evolutionary need hence you need to make sure you can survive your
present so you can exist in the future, your intention is
asymmetrically divided to the advantage of the present Vs the future.
Investor's existence at any moment in time is looked at as a unique
event, thus most of their decisions are based on elements that deal
with this unique moment, in essence every moment in time is unique
and hence it is practice a new era, but life has certain physical,
biological and psychological factors that have been consistent
regardless of the moment of time we deal with. It is this consistency
that gives a sense of continuity to our lives.
But before I get carried away in philosophical explanations, I need
to point out that new eras of optimism that might seem different, as
well as equally important new era of pessimism are the same. They are
both a continuity of each other, they are like a moving yearly
average from top to bottom, but the overall trend is a consistent
long term economic growth, a look at earning growth from 1871 to 2000
show an amazing consistent growth line with relatively small bumps up
or down, it is this trend line that actually dismiss any theory of
new era one way or another.
Nawar ALSAADI
06/04/2001

Congratulations to Riccardo Ronco for accurately predicting a fall of
Nasdaq to 1700 levels.

It fits into the time frame he predicted for it when I met him personally
in London a couple of months ago.

I now await the opinion of the star of Reuters TV regarding the time frame
for a projected fall of NASDAQ to 1100-1200 as mentioned earlier on this
yahoo group.

Dr. Shantanu Nagarkatti

Yes,

     This time is different: the *extended plateau* got beyond any
*irrationaly and exhuberantly* imaginable expectation, but, like I. Fisher,
people will learn the hard way, and unlike him the *mass* (like in those
torrid years of the late '20s and '30s) will not have his fortune ? ;-)

What do you think Nawar ?

Ariel

----- Original Message -----
From: Nawar <Nawaralsaadi@...>
To: <Behavioral-Finance@yahoogroups.com>
Sent: Friday, April 06, 2001 9:40 AM
Subject: [Behavioral-Finance] This time, it is different!


> This time, it is different!
>
> How many times have we heard this sentence as the market hit new
> highs?, investors inspired by new technology, new economy, more
> efficiency and so on, push valuations to unprecedented levels while
> attempting to justify them with the new era slogan. The 1920s mania
> regarding the a host of new technology inventions, new scientific
> management and better macro economic management presents a perfect
> example. It is at the period that Black Fisher one of the most
> respected economist of the time predicted that stock prices have
> achieved a "permanently high plateau", and the same stands for
> virtually most cycles of investment optimism: it is this feeling of
> new era is born.
> This time I am going to talk about a new concept of the new era
> feeling, I am going to mention a another phenomena that is exactly
> the same in essence but with power toward the other direction. This
> phenomenon is the feeling that this sell off is different. The fact
> that we are entering a period of perpetual gloom and gloom that it
> will last for years to come, equally justified by a host of logical
> explanations. One of the explanations given by the doom predictors is
> the market has hit some extreme historical highs and as a result, the
> sell off is a new reaction to an unprecedented situation, thus it is
> a new gloom era, a different era.
> During the recession and the stock market slump of the early to mid
> 70s, investors coined the term "stagflation" and predicted that we
> have entered a new era of lasting gloom with no exit in sight, as
> indicated by a speech given by Mr.Stein head of Dryfus of the time to
> Harvard business school where he outlined that all methods of
> security analysis have became irrelevant as we entered a new era of
> scarcity.
> The stock market has this tendency to overshoot and undershoot around
> a moving equilibrium point, when you look at the fundamentals of a
> company like GE you notice that concept of new era does not apply on
> the upside or on the downside, the company has been growing
> consistently regardless of new eras in either direction.
>  A crucial mistake committed by the masses it is the need to classify
> short term event as new eras as if we are living in a privileged
> moment in history, new trends and new eras take longer then few years
> to have it their effects. The Internet for example existed for more
> then 30 years and it took all this time for the Internet to gain its
> present role. It is the same when you deal with environmental or
> demographic factors, human activity causing the greenhouse effect has
> taken more then 150 years to cause a truly new paradigm, it has been
> in the making since the industrial revolution.
> But unfortunately the practice of classifying short term developments
> as having a major economic, political and social impact that justify
> major changes in stock prices is baseless. Almost virtually all-major
> trends take a very long time to materialize, for example the decoding
> of the human genome have the potentiality to martially change life as
> we know it, but will not have it new impact until 10, 20 or 30 years
> down the road, and it is likely the change will be gradual with major
> developments unfolding through time.
> What I am trying to do is not to undermine the importance of new
> inventions and new knowledge, but I am trying to spread its benefits
> and disadvantages through out a long period of time, more in line on
> how actual events unfold.
> There is no exact moment in time that can be defined as totally new,
> since all the knowledge in that moment is a product of human
> knowledge as long as humanity existed, hence the sudden surge in
> economic values in response to new developments is temporary over
> reaction to the upside or the down side.
> Investors and people in general do not have the capacity to look too
> far down in the future, our brains are not qualified or designed to
> attain this level of knowledge to truly value the future, people
> attention has a relatively short term span. This short term span is
> an evolutionary need hence you need to make sure you can survive your
> present so you can exist in the future, your intention is
> asymmetrically divided to the advantage of the present Vs the future.
> Investor's existence at any moment in time is looked at as a unique
> event, thus most of their decisions are based on elements that deal
> with this unique moment, in essence every moment in time is unique
> and hence it is practice a new era, but life has certain physical,
> biological and psychological factors that have been consistent
> regardless of the moment of time we deal with. It is this consistency
> that gives a sense of continuity to our lives.
> But before I get carried away in philosophical explanations, I need
> to point out that new eras of optimism that might seem different, as
> well as equally important new era of pessimism are the same. They are
> both a continuity of each other, they are like a moving yearly
> average from top to bottom, but the overall trend is a consistent
> long term economic growth, a look at earning growth from 1871 to 2000
> show an amazing consistent growth line with relatively small bumps up
> or down, it is this trend line that actually dismiss any theory of
> new era one way or another.
> Nawar ALSAADI
> 06/04/2001
>
>
>
>
> To unsubscribe from this group, send an email to:
> Behavioral-Finance-unsubscribe@egroups.com
>
>
>
> Your use of Yahoo! Groups is subject to http://docs.yahoo.com/info/terms/
>
>

Nawar,

     What is a small bump for you ? For example, the economic depression of
the thirties fits your definition, does the current economic depression /
deflation (we economists are so shy to use such a term in this the
post-keynesian mith era) in Japan and LATAM fit also your definition ?.
Isn't a bit scary to think, maybe just a little, about the implications that
any *extended plateau* has in the long term when the *extended dis-plateau*
finally triggers ?, does Galton's law has any relevance at all ? what will
happened when the *extended plateau* expectation begins to be erased from
the expectational formula of economic agents, shifting their behavior into
the new regime, as is now ocurring in an increasing part of the world, and
probably beginning in the US and Europe, another *small* bump ?

Just, some ideas caught in the wind provoked by your post, to think about
them.

FWIW
Ariel

Yes it is Irving fisher, I know I haver mistaken him with the options
guy fisher black that dies before he got his nobel prize, I was so
into my writing...and made the error...sorry!


This time it is different!

How many times have we heard this sentence as the market hit new
highs?, investors inspired by new technology, new economy, more
efficiency and so on, push valuations to unprecedented levels while
attempting to justify them with the new era slogan. The 1920s mania
regarding the a host of new technology inventions, new scientific
management and better macro economic management presents a perfect
example. It is at the period that Irving Fisher one of the most
respected economist of the time predicted that stock prices have
achieved a "permanently high plateau", and the same stands for
virtually most cycles of investment optimism: it is this feeling of
new era is born.
This time I am going to talk about a new concept of the new era
feeling, I am going to mention a another phenomena that is exactly
the same in essence but with power toward the other direction. This
phenomenon is the feeling that this sell off is different. The fact
that we are entering a period of perpetual gloom and gloom that it
will last for years to come, equally justified by a host of logical
explanations. One of the explanations given by the doom predictors is
the market has hit some extreme historical highs and as a result, the
sell off is a new reaction to an unprecedented situation, thus it is
a new gloom era, a different era.
During the recession and the stock market slump of the early to mid
70s, investors coined the term "stagflation" and predicted that we
have entered a new era of lasting gloom with no exit in sight, as
indicated by a speech given by Mr.Stein head of Dryfus of the time to
Harvard business school where he outlined that all methods of
security analysis have became irrelevant as we entered a new era of
scarcity.
The stock market has this tendency to overshoot and undershoot around
a moving equilibrium point, when you look at the fundamentals of a
company like GE you notice that concept of new era does not apply on
the upside or on the downside, the company has been growing
consistently regardless of new eras in either direction.
  A crucial mistake committed by the masses it is the need to classify
short term event as new eras as if we are living in a privileged
moment in history, new trends and new eras take longer then few years
to have it their effects. The Internet for example existed for more
then 30 years and it took all this time for the Internet to gain its
present role. It is the same when you deal with environmental or
demographic factors, human activity causing the greenhouse effect has
taken more then 150 years to cause a truly new paradigm, it has been
in the making since the industrial revolution.
But unfortunately the practice of classifying short term developments
as having a major economic, political and social impact that justify
major changes in stock prices is baseless. Almost virtually all-major
trends take a very long time to materialize, for example the decoding
of the human genome have the potentiality to martially change life as
we know it, but will not have it new impact until 10, 20 or 30 years
down the road, and it is likely the change will be gradual with major
developments unfolding through time.
What I am trying to do is not to undermine the importance of new
inventions and new knowledge, but I am trying to spread its benefits
and disadvantages through out a long period of time, more in line on
how actual events unfold.
There is no exact moment in time that can be defined as totally new,
since all the knowledge in that moment is a product of human
knowledge as long as humanity existed, hence the sudden surge in
economic values in response to new developments is temporary over
reaction to the upside or the down side.
Investors and people in general do not have the capacity to look too
far down in the future, our brains are not qualified or designed to
attain this level of knowledge to truly value the future, people
attention has a relatively short term span. This short term span is
an evolutionary need hence you need to make sure you can survive your
present so you can exist in the future, your intention is
asymmetrically divided to the advantage of the present Vs the future.
Investor's existence at any moment in time is looked at as a unique
event, thus most of their decisions are based on elements that deal
with this unique moment, in essence every moment in time is unique
and hence it is practice a new era, but life has certain physical,
biological and psychological factors that have been consistent
regardless of the moment of time we deal with. It is this consistency
that gives a sense of continuity to our lives.
But before I get carried away in philosophical explanations, I need
to point out that new eras of optimism that might seem different, as
well as equally important new era of pessimism are the same. They are
both a continuity of each other, they are like a moving yearly
average from top to bottom, but the overall trend is a consistent
long term economic growth, a look at earning growth from 1871 to 2000
show an amazing consistent growth line with relatively small bumps up
or down, it is this trend line that actually dismiss any theory of
new era one way or another.
Nawar ALSAADI
06/04/2001





--- In Behavioral-Finance@y..., "Ariel M. Viale" <ariel@v...> wrote:
> Yes,
>
>     This time is different: the *extended plateau* got beyond any
> *irrationaly and exhuberantly* imaginable expectation, but, like I.
Fisher,
> people will learn the hard way, and unlike him the *mass* (like in
those
> torrid years of the late '20s and '30s) will not have his
fortune ? ;-)
>
> What do you think Nawar ?
>
> Ariel
>
> ----- Original Message -----
> From: Nawar <Nawaralsaadi@y...>
> To: <Behavioral-Finance@y...>
> Sent: Friday, April 06, 2001 9:40 AM
> Subject: [Behavioral-Finance] This time, it is different!
>
>
> > This time, it is different!
> >
> > How many times have we heard this sentence as the market hit new
> > highs?, investors inspired by new technology, new economy, more
> > efficiency and so on, push valuations to unprecedented levels
while
> > attempting to justify them with the new era slogan. The 1920s
mania
> > regarding the a host of new technology inventions, new scientific
> > management and better macro economic management presents a perfect
> > example. It is at the period that Black Fisher one of the most
> > respected economist of the time predicted that stock prices have
> > achieved a "permanently high plateau", and the same stands for
> > virtually most cycles of investment optimism: it is this feeling
of
> > new era is born.
> > This time I am going to talk about a new concept of the new era
> > feeling, I am going to mention a another phenomena that is exactly
> > the same in essence but with power toward the other direction.
This
> > phenomenon is the feeling that this sell off is different. The
fact
> > that we are entering a period of perpetual gloom and gloom that it
> > will last for years to come, equally justified by a host of
logical
> > explanations. One of the explanations given by the doom
predictors is
> > the market has hit some extreme historical highs and as a result,
the
> > sell off is a new reaction to an unprecedented situation, thus it
is
> > a new gloom era, a different era.
> > During the recession and the stock market slump of the early to
mid
> > 70s, investors coined the term "stagflation" and predicted that we
> > have entered a new era of lasting gloom with no exit in sight, as
> > indicated by a speech given by Mr.Stein head of Dryfus of the
time to
> > Harvard business school where he outlined that all methods of
> > security analysis have became irrelevant as we entered a new era
of
> > scarcity.
> > The stock market has this tendency to overshoot and undershoot
around
> > a moving equilibrium point, when you look at the fundamentals of a
> > company like GE you notice that concept of new era does not apply
on
> > the upside or on the downside, the company has been growing
> > consistently regardless of new eras in either direction.
> >  A crucial mistake committed by the masses it is the need to
classify
> > short term event as new eras as if we are living in a privileged
> > moment in history, new trends and new eras take longer then few
years
> > to have it their effects. The Internet for example existed for
more
> > then 30 years and it took all this time for the Internet to gain
its
> > present role. It is the same when you deal with environmental or
> > demographic factors, human activity causing the greenhouse effect
has
> > taken more then 150 years to cause a truly new paradigm, it has
been
> > in the making since the industrial revolution.
> > But unfortunately the practice of classifying short term
developments
> > as having a major economic, political and social impact that
justify
> > major changes in stock prices is baseless. Almost virtually all-
major
> > trends take a very long time to materialize, for example the
decoding
> > of the human genome have the potentiality to martially change
life as
> > we know it, but will not have it new impact until 10, 20 or 30
years
> > down the road, and it is likely the change will be gradual with
major
> > developments unfolding through time.
> > What I am trying to do is not to undermine the importance of new
> > inventions and new knowledge, but I am trying to spread its
benefits
> > and disadvantages through out a long period of time, more in line
on
> > how actual events unfold.
> > There is no exact moment in time that can be defined as totally
new,
> > since all the knowledge in that moment is a product of human
> > knowledge as long as humanity existed, hence the sudden surge in
> > economic values in response to new developments is temporary over
> > reaction to the upside or the down side.
> > Investors and people in general do not have the capacity to look
too
> > far down in the future, our brains are not qualified or designed
to
> > attain this level of knowledge to truly value the future, people
> > attention has a relatively short term span. This short term span
is
> > an evolutionary need hence you need to make sure you can survive
your
> > present so you can exist in the future, your intention is
> > asymmetrically divided to the advantage of the present Vs the
future.
> > Investor's existence at any moment in time is looked at as a
unique
> > event, thus most of their decisions are based on elements that
deal
> > with this unique moment, in essence every moment in time is unique
> > and hence it is practice a new era, but life has certain physical,
> > biological and psychological factors that have been consistent
> > regardless of the moment of time we deal with. It is this
consistency
> > that gives a sense of continuity to our lives.
> > But before I get carried away in philosophical explanations, I
need
> > to point out that new eras of optimism that might seem different,
as
> > well as equally important new era of pessimism are the same. They
are
> > both a continuity of each other, they are like a moving yearly
> > average from top to bottom, but the overall trend is a consistent
> > long term economic growth, a look at earning growth from 1871 to
2000
> > show an amazing consistent growth line with relatively small
bumps up
> > or down, it is this trend line that actually dismiss any theory of
> > new era one way or another.
> > Nawar ALSAADI
> > 06/04/2001
> >
> >
> >
> >
> > To unsubscribe from this group, send an email to:
> > Behavioral-Finance-unsubscribe@egroups.com
> >
> >
> >
> > Your use of Yahoo! Groups is subject to
http://docs.yahoo.com/info/terms/
> >
> >

I am sorry, I have meant the VIX, the market volatility index and not
the options index, that basiclly highlight the level of unease in the
market, here is the link:

http://finance.yahoo.com/q?s=^VIX&d=5y


--- In Behavioral-Finance@y..., Spéculateur <info@s...> wrote:
> Nawar!
> If I am not mistaken the point of increased volatility in tech
stock is right but as for options (specialists better know) the
volatility is on the decline (see chart)!.
> Of course in bear markets upgoing is always multiplied by people
covering their shorts.
> So technically this lastnight upside move is quite normal (not
predicting any future).
> CBOE Volatility index herewith

>From: "Dr. Shantanu Nagarkatti" <shantanunagarkatti@...>
>Date: Fri, 06 Apr 2001 20:16:10 +0530
>Subject: [Behavioral-Finance] Ronco's prediction for Nasdaq
>
>Congratulations to Riccardo Ronco for accurately predicting a fall of
>Nasdaq to 1700 levels.
>
>It fits into the time frame he predicted for it when I met him personally
>in London a couple of months ago.
>
>I now await the opinion of the star of Reuters TV regarding the time frame
>for a projected fall of NASDAQ to 1100-1200 as mentioned earlier on this
>yahoo group.
>
>Dr. Shantanu Nagarkatti

:))

> -----Original Message-----
> From: Martin Sewell [mailto:martin@...]
> Sent: Saturday, April 07, 2001 2:51 PM
> To: Behavioral-Finance
> Subject: [Behavioral-Finance] My nomination for this month's Order of
> the Brown Nose (OBN)
>
>
>
> >From: "Dr. Shantanu Nagarkatti" <shantanunagarkatti@...>
> >Date: Fri, 06 Apr 2001 20:16:10 +0530
> >Subject: [Behavioral-Finance] Ronco's prediction for Nasdaq
> >
> >Congratulations to Riccardo Ronco for accurately predicting a fall of
> >Nasdaq to 1700 levels.
> >
> >It fits into the time frame he predicted for it when I met him personally
> >in London a couple of months ago.
> >
> >I now await the opinion of the star of Reuters TV regarding the
> time frame
> >for a projected fall of NASDAQ to 1100-1200 as mentioned earlier on this
> >yahoo group.
> >
> >Dr. Shantanu Nagarkatti
>
>
>
> To unsubscribe from this group, send an email to:
> Behavioral-Finance-unsubscribe@egroups.com
>
>
>
> Your use of Yahoo! Groups is subject to http://docs.yahoo.com/info/terms/
>
>
>

What is the matter Martin?

Are you jealous? ;-))

Shantanu

At 07:33 AM 8/04/01 +0000, you wrote:
>
>To unsubscribe from this group, send an email to:
>Behavioral-Finance-unsubscribe@egroups.com
>
>
>------------------------------------------------------------------------
>
>There are 2 messages in this issue.
>
>Topics in this digest:
>
>       1. My nomination for this month's Order of the Brown Nose (OBN)
>            From: Martin Sewell <martin@...>
>       2. RE: My nomination for this month's Order of the Brown Nose (OBN)
>            From: "Riccardo" <riccardo@...>
>
>
>________________________________________________________________________
>________________________________________________________________________
>
>Message: 1
>    Date: Sat, 07 Apr 2001 14:51:22 +0100
>    From: Martin Sewell <martin@...>
>Subject: My nomination for this month's Order of the Brown Nose (OBN)
>
>
> >From: "Dr. Shantanu Nagarkatti" <shantanunagarkatti@...>
> >Date: Fri, 06 Apr 2001 20:16:10 +0530
> >Subject: [Behavioral-Finance] Ronco's prediction for Nasdaq
> >
> >Congratulations to Riccardo Ronco for accurately predicting a fall of
> >Nasdaq to 1700 levels.
> >
> >It fits into the time frame he predicted for it when I met him personally
> >in London a couple of months ago.
> >
> >I now await the opinion of the star of Reuters TV regarding the time frame
> >for a projected fall of NASDAQ to 1100-1200 as mentioned earlier on this
> >yahoo group.
> >
> >Dr. Shantanu Nagarkatti
>
>
>
>________________________________________________________________________
>________________________________________________________________________
>
>Message: 2
>    Date: Sat, 7 Apr 2001 15:43:20 +0100
>    From: "Riccardo" <riccardo@...>
>Subject: RE: My nomination for this month's Order of the Brown Nose (OBN)
>
>:))
>
> > -----Original Message-----
> > From: Martin Sewell [mailto:martin@...]
> > Sent: Saturday, April 07, 2001 2:51 PM
> > To: Behavioral-Finance
> > Subject: [Behavioral-Finance] My nomination for this month's Order of
> > the Brown Nose (OBN)
> >
> >
> >
> > >From: "Dr. Shantanu Nagarkatti" <shantanunagarkatti@...>
> > >Date: Fri, 06 Apr 2001 20:16:10 +0530
> > >Subject: [Behavioral-Finance] Ronco's prediction for Nasdaq
> > >
> > >Congratulations to Riccardo Ronco for accurately predicting a fall of
> > >Nasdaq to 1700 levels.
> > >
> > >It fits into the time frame he predicted for it when I met him personally
> > >in London a couple of months ago.
> > >
> > >I now await the opinion of the star of Reuters TV regarding the
> > time frame
> > >for a projected fall of NASDAQ to 1100-1200 as mentioned earlier on this
> > >yahoo group.
> > >
> > >Dr. Shantanu Nagarkatti
> >
> >
> >
> > To unsubscribe from this group, send an email to:
> > Behavioral-Finance-unsubscribe@egroups.com
> >
> >
> >
> > Your use of Yahoo! Groups is subject to http://docs.yahoo.com/info/terms/
> >
> >
> >
>
>
>
>________________________________________________________________________
>________________________________________________________________________
>
>
>
>Your use of Yahoo! Groups is subject to http://docs.yahoo.com/info/terms/

At 19:21 08/04/01 -0700, Chris Carolan <chris@...> wrote:
>Yes I have Martin, thank you.  Here's a reprint of my post about that
>paper made on the Behavioral Finance list last November.

I should have remembered...

>One month ago, the following paper was referenced on this list.
><http://www.econ.ucsd.edu/papers/files/ucsd9816.pdf>http://www.econ.ucsd.edu/pa\
pers/files/ucsd9816.pdf
>
>The paper purports to examine a "large universe of calendar
>effects."  Upon examination, the paper's calendar effects are limited to a
>single calendar, our modern Gregorian calendar.  This gross error is the
>primary plague of academic research into calendar effects in financial
>markets.  If one is to seriously examine a "large universe" of calendar
>effects, one must begin with a large universe of calendars.
>
>Example,  should the apparent effect of October weakness be viewed solely
>in terms of the Gregorian calendar?
>
>The chart below shows a basket of Babylonian commodity prices recorded
>long before the establishment of the Gregorian calendar.  Half of the 8
>lowest price readings occur during the Babylonian month that is
>commensurate with the Jewish calendar month of Tishri, which is close to
>the Gregorian October.
>
>Babylon1.gif
>
>The Babylonian chart hints at panic Autumn selling nearly a millennia
>before our modern calendar. (Note the primary crop in Babylon was barley,
>harvested in the spring, which argues against a price spike lower caused
>by new crops coming to market.)
>
>If one simply looks at October DJIA performance since 1915, one finds that
>the average change for the DJIA from 1915 through 1999 is -0.4%, not an
>extraordinary reading. However, if one sorts those Octobers by the
>following criteria, whether or not there was a full moon between October
>3-18 inclusive, then the results become -1.8% for full moon and +1.6% for
>no full moon.
>
>Similarly, academics who have examined lunar phases and markets without
>sorting the data by season are guilty of not considering the full universe
>of calendar effects.  My own preliminary research hints that the lunar
>polarity of the panic effect is opposite on opposite solar seasons.
>Grant's panic of 1884 occured in the opposite season from the crashes of
>1929 and 1987 and in the opposite lunar phase as well.
>
>The key to understanding calendar effects is first understanding
>calendars. At Calendar Research, Inc., we've had remarkable forecasting
>success with this approach. In late 1997, we stated that U.S. stocks would
>encounter an emotional "pothole" climaxing in the third week of April.  To
>date, the strongest selling of 2000 has occurred on April 14.  The "chaos"
>theorists believe that precise forecasting of extreme emotional events
>well into the future is impossible.  I respectfully disagree.

However, expanding the universe actually increases the inherent dangers of
data mining.  Datamining is often considered a "dirty word" by
statisticians.  One needs to ask not just, "is this statistically
significant?"; but, "is this statistically significant *given that I've
been datamining*".

1) For example, you can start off with the hypothesis, "There exists a
January effect" and test it, no problem.

2) However, if you search through all twelve months to find the most
significant, you would expect it to be...significant.

1) above is, alas, not even true now.  Because *many other people* have
datamined before you, which is why we have heard of the "January
effect".  Besides, if it did exist or was commonly perceived to exist, - it
should vanish anyway...

Cheers

Martin

We are waiting!
Shantanu
--- In Behavioral-Finance@egroups.com, "Riccardo" <riccardo@r...>
wrote:
I agree with you all the way along... everything will start from the
Nikkei
below 13000 to target 10000 then panic will spread on Nasdaq 100
targeting
1100 (162% move from 4420 of the March first bearish move)... Europe
will
pay on TMT HARDLY as well. Bonds up to the 1998 panic levels again.
Fed
strip is pricing anothe 100 bps by august... too much to manage for
Fed...
It is a matter of trust and investors are really too scared and I
think of
such a tidal wave... well let's the markets speak for themselves. I
hope to
be wrong but when I offered my projection of 2200-2100 on Reuters TV
many
months ago it was hard to digest as well
But Greenspan cannot cut again... it will be admitting defeat and
this would
really scare the markets. And by the way it will not make a
difference. I do
believe G thinks about another 1998 with massive and quick rate cuts
but
then it was a financial crisis. Here 50% losses on Nasdaq 100 = big
trust
crisis in the systems... The "machine" can stop every now and then
and it
will. The result of using in 2001 a 1998 politics will generate a 1987
effect... same man same mistake.
History repeats itself.

Riccardo Ronco
London
--- End forwarded message ---

----- Original Message -----

From: Dr. Shantanu Nagarkatti

To: Behavioral-Finance@yahoogroups.com

Sent: Monday, April 09, 2001 4:03 AM

Subject: FW: RE: [Behavioral-Finance] Moral hazard and central banks

We are waiting!
Shantanu
--- In Behavioral-Finance@egroups.com, "Riccardo" <riccardo@r...>
wrote:
I agree with you all the way along... everything will start from the
Nikkei
below 13000 to target 10000 then panic will spread on Nasdaq 100
targeting
1100 (162% move from 4420 of the March first bearish move)... Europe
will
pay on TMT HARDLY as well. Bonds up to the 1998 panic levels again.
Fed
strip is pricing anothe 100 bps by august... too much to manage for
Fed...
It is a matter of trust and investors are really too scared and I
think of
such a tidal wave... well let's the markets speak for themselves. I
hope to
be wrong but when I offered my projection of 2200-2100 on Reuters TV
many
months ago it was hard to digest as well
But Greenspan cannot cut again... it will be admitting defeat and
this would
really scare the markets. And by the way it will not make a
difference. I do
believe G thinks about another 1998 with massive and quick rate cuts
but
then it was a financial crisis. Here 50% losses on Nasdaq 100 = big
trust
crisis in the systems... The "machine" can stop every now and then
and it
will. The result of using in 2001 a 1998 politics will generate a 1987
effect... same man same mistake.
History repeats itself.

Riccardo Ronco
London
--- End forwarded message ---




To unsubscribe from this group, send an email to:
Behavioral-Finance-unsubscribe@egroups.com



Your use of Yahoo! Groups is subject to the Yahoo! Terms of Service.