Irrational exuberance 3/4/06

Discussion in 'Share Investing Strategies, Theories & Education' started by Jane M, 3rd Apr, 2006.

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  1. -T-

    -T- Well-Known Member

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    That's the number one quoted reason by fundamental analysts why TA might work; enough sheep following the herd will inevitably influence the markets. :confused:
     
  2. -T-

    -T- Well-Known Member

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    Just curious, if so many people believe we're going to see a bit of a fall today, shouldn't we all be out buying puts and making a quick $?

    I'll give it a go; here's a paper trade I prepared last night:

    LHGQJ x 170 @ 0.085 = $14,690.98 (includes all transaction costs)
    OSHLZ x 92 @ 0.16 = $14,874.56 (includes all transaction costs)

    I'm not sure if there are even that many contracts for sale, but let's see anyway. :)
     
  3. Tropo

    Tropo Well-Known Member

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    Hahahaaaaa... I would not take any academic seriously at all, unless I would see his/her trading record based on the stuff he or she is preaching...(or should I say...unless her/his preaching works in the real life).
    Personally I do not pay any attention at all, to any "guru" or "expert" who never put his own money on the line !!.
    Seems to me that your lecturer it's a very entertaining person...
    Have a good time mate :D
     
  4. Tropo

    Tropo Well-Known Member

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    I would not play with puts right now !!! :cool:
    My second level was hit today (5100/10)
    Are we going to hit 3-rd (5028/35). Time will tell.
    Anyway ....Have fun all the way !! :D
     
  5. -T-

    -T- Well-Known Member

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    Do you mind me asking why you say that? Is it because the prices will be inflated by people following the down trend? Or because you think prices could rebound any moment?

    That paper trade I quoted was pretty useless because a) the market isn't open at 3am when I wrote the trade, b) those securities aren't liquid enough to expect to buy that many without affecting the price, c) they were just estimated prices (OSH was very close to the last price, LHG was a bit off), and d) it was just a fluke that the DJIA also went down prior.

    However, it seems with the latest prices for those puts, I would have made about $40k in the space of a few hours. But really, too many assumptions and variables to look at it rationally.

    It still raises the question why you wouldn't buy puts when the market is expected to fall. I'd rather not have to learn too many more lessons through the hip pocket. :D
     
  6. Tropo

    Tropo Well-Known Member

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    O sorry.....I misunderstand you. I thought that you are talking about writing puts... :confused:
    Well... paper trading it's NOT the same as a real one. I wonder if you could put real money in the same trade right now ?
    :cool:
     

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