C
Thanks Raj, thats the one.
for those not knowing this:
Crashes: The Tulip and Bulb Craze
When: 1634-1637
Where: Holland
The amount the market declined from peak to bottom: This number is difficult to calculate, but, we can tell you that at the peak of the market, a person could trade a single tulip for an entire estate, and, at the bottom, one tulip was the price of a common onion.
Synopsis: In 1593 tulips were brought from Turkey and introduced to the Dutch. The novelty of the new flower made it widely sought after and therefore fairly pricey. After a time, the tulips contracted a non-fatal virus known as mosaic, which didn't kill the tulip population but altered them causing "flames" of color to appear upon the petals. The color patterns came in a wide variety, increasing the rarity of an already unique flower. Thus, tulips, which were already selling at a premium, began to rise in price according to how their virus alterations were valued, or desired. Everyone began to deal in bulbs, essentially speculating on the tulip market, which was believed to have no limits.
The true bulb buyers (the garden centers of the past) began to fill up inventories for the growing season, depleting the supply further and increasing scarcity and demand. Soon, prices were rising so fast and high that people were trading their land, life savings, and anything else they could liquidate to get more tulip bulbs. Many Dutch persisted in believing they would sell their hoard to hapless and unenlightened foreigners, thereby reaping enormous profits. Somehow, the originally overpriced tulips enjoyed a twenty-fold increase in value - in one month!
Needless to say, the prices were not an accurate reflection of the value of a tulip bulb. As it happens in many speculative bubbles, some prudent people decided to sell and crystallize their profits. A domino effect of progressively lower and lower prices took place as everyone tried to sell while not many were buying. The price began to dive, causing people to panic and sell regardless of losses.
Dealers refused to honor contracts and people began to realize they traded their homes for a piece of greenery; panic and pandemonium were prevalent throughout the land. The government attempted to step in and halt the crash by offering to honor contracts at 10% of the face value, but then the market plunged even lower, making such restitution impossible. No one emerged unscathed from the crash. Even the people who had locked in their profit by getting out early suffered under the following depression.
The effects of the tulip craze left the Dutch very hesitant about speculative investments for quite some time. Investors now can know that it is better to stop and smell the flowers than to stake your future upon one
for more such bubbles, http://www.investopedia.com/features/crashes/crashes1.asp - so basically Europe started this & USA followed in the south sea bubble...
for those not knowing this:
Crashes: The Tulip and Bulb Craze
When: 1634-1637
Where: Holland
The amount the market declined from peak to bottom: This number is difficult to calculate, but, we can tell you that at the peak of the market, a person could trade a single tulip for an entire estate, and, at the bottom, one tulip was the price of a common onion.
Synopsis: In 1593 tulips were brought from Turkey and introduced to the Dutch. The novelty of the new flower made it widely sought after and therefore fairly pricey. After a time, the tulips contracted a non-fatal virus known as mosaic, which didn't kill the tulip population but altered them causing "flames" of color to appear upon the petals. The color patterns came in a wide variety, increasing the rarity of an already unique flower. Thus, tulips, which were already selling at a premium, began to rise in price according to how their virus alterations were valued, or desired. Everyone began to deal in bulbs, essentially speculating on the tulip market, which was believed to have no limits.
The true bulb buyers (the garden centers of the past) began to fill up inventories for the growing season, depleting the supply further and increasing scarcity and demand. Soon, prices were rising so fast and high that people were trading their land, life savings, and anything else they could liquidate to get more tulip bulbs. Many Dutch persisted in believing they would sell their hoard to hapless and unenlightened foreigners, thereby reaping enormous profits. Somehow, the originally overpriced tulips enjoyed a twenty-fold increase in value - in one month!
Needless to say, the prices were not an accurate reflection of the value of a tulip bulb. As it happens in many speculative bubbles, some prudent people decided to sell and crystallize their profits. A domino effect of progressively lower and lower prices took place as everyone tried to sell while not many were buying. The price began to dive, causing people to panic and sell regardless of losses.
Dealers refused to honor contracts and people began to realize they traded their homes for a piece of greenery; panic and pandemonium were prevalent throughout the land. The government attempted to step in and halt the crash by offering to honor contracts at 10% of the face value, but then the market plunged even lower, making such restitution impossible. No one emerged unscathed from the crash. Even the people who had locked in their profit by getting out early suffered under the following depression.
The effects of the tulip craze left the Dutch very hesitant about speculative investments for quite some time. Investors now can know that it is better to stop and smell the flowers than to stake your future upon one
for more such bubbles, http://www.investopedia.com/features/crashes/crashes1.asp - so basically Europe started this & USA followed in the south sea bubble...
Last edited by a moderator:
Hey Ankit Wassup... see even Mr. Livermore finds it fishy... what he says are reactions but someone gotta control to make people react.... 
Its in built by HIM!!!
Its the 'self - control' which most of us lack and is exploited by your so called : "controllers" who make money at the expense of others!!
charts r like mirrors......never shy ,fearful or wrong.....bitter truth....its the humans who read them false......emotions....greed & fear.
so many hedge funds collapsed this year....dont u think they did not have a battery of richly paid tehnical guys hired.....still what went wrong ?
THE ULTIMATE TRUTH .......
"Success hugS ..... in ''Private"
But .........................
"Failure Always kicks .... In ''Public"..!
so many hedge funds collapsed this year....dont u think they did not have a battery of richly paid tehnical guys hired.....still what went wrong ?
THE ULTIMATE TRUTH .......
"Success hugS ..... in ''Private"
But .........................
"Failure Always kicks .... In ''Public"..!
charts r like mirrors......never shy ,fearful or wrong.....bitter truth....its the humans who read them false......emotions....greed & fear.
so many hedge funds collapsed this year....dont u think they did not have a battery of richly paid tehnical guys hired.....still what went wrong ?
THE ULTIMATE TRUTH .......
"Success hugS ..... in ''Private"
But .........................
"Failure Always kicks .... In ''Public"..!
so many hedge funds collapsed this year....dont u think they did not have a battery of richly paid tehnical guys hired.....still what went wrong ?
THE ULTIMATE TRUTH .......
"Success hugS ..... in ''Private"
But .........................
"Failure Always kicks .... In ''Public"..!
I guess it should not be surprising that many people have short memories. A "What have you done for me lately?" patina colors almost every sector of public opinion: Athletes get hit with it, politicians get it, companies get it. If you're not producing now, you're nothing.
This year the Rule Breaker portfolio, among all of our real-money portfolios, has been shredded by negative sentiment from practitioners and media alike, stemming from its horrid 2000 performance of -50%. Suddenly the proponents of "buy quality at any price" are looking for someone or something to blame, and David Gardner -- with his bubbly, eminently positive view of the stock market -- makes for as good a target as any.
What I find interesting about the witch hunt is two things: First, David stated at the beginning of 2000 that he was comfortable with the prospect that his portfolio (the Rule Breaker is his money) could lose a significant portion of its value over the year; and secondly, that we are seeing from many correspondents that one of the "lessons" learned from the carnage in 2000 is that investors "ignore the charts at their own peril," or something similar.
Technical analysis received a pretty big publicity boost in 2000, given the long, tortuous decline in several sectors popular with individual investors. I think that some of this attribution is faulty: Over the last nine months, those with some money on the sidelines inherently did better than most of those who were fully invested. Yep, long-term buy-and-hold sure took it on the chin.
The Rule Breaker has never been advertised as anything but a high-risk portfolio, nothing less than a venture capital portfolio. Ask any VC and he will tell you that, give or take a few percentage points, he EXPECTS more than 90% of his investments to lose money, and that he will actually earn the majority of his returns on 1% of those investments made. This is why "price doesn't matter" for Rule Breakers, because so few of them are expected to succeed, and those that do will do so brilliantly. It is an aggressive, high-risk way to invest, one to which I would only allocate a small percentage of my capital.
Using such methodology, of course price is less valid than a firm grasp of how the company expects to make money. I have seen no one yet who has devised a good model for valuing Amazon.com (Nasdaq: AMZN), except for those who can make a pretty good case that it is zero (and, of course, Paul Commins' YGBFKM methodology). David can speak for himself, but I would like to say that of all of the messages of Fooldom, this one may be the one that has been most poorly communicated and thus misrepresented.
Technical Analysis is a simple science: It states that stocks that are in motion tend to stay in motion, that a stock that rose today is more likely to rise tomorrow. It is a powerful tonic for those who are terrified by the notion that short-term stock market movements are without rationality. Technical Analysis allows investors to say "Ignore the reasons, they are meaningless. Focus on the patterns." The pure technician ignores such basic concepts as stock value, price, or other fundamentals on the belief that the institutional investors leave telltale signs when they are moving into or out of a stock, and that the "smart money" telegraphs its actions by virtue of its sheer size.
This is a powerfully attractive theory, and I do not doubt that there are those who can practice it with some success. But these people are not the "average" technical analysts. They are, in fact, few and far between.
Ovarian Cysts No More
This year the Rule Breaker portfolio, among all of our real-money portfolios, has been shredded by negative sentiment from practitioners and media alike, stemming from its horrid 2000 performance of -50%. Suddenly the proponents of "buy quality at any price" are looking for someone or something to blame, and David Gardner -- with his bubbly, eminently positive view of the stock market -- makes for as good a target as any.
What I find interesting about the witch hunt is two things: First, David stated at the beginning of 2000 that he was comfortable with the prospect that his portfolio (the Rule Breaker is his money) could lose a significant portion of its value over the year; and secondly, that we are seeing from many correspondents that one of the "lessons" learned from the carnage in 2000 is that investors "ignore the charts at their own peril," or something similar.
Technical analysis received a pretty big publicity boost in 2000, given the long, tortuous decline in several sectors popular with individual investors. I think that some of this attribution is faulty: Over the last nine months, those with some money on the sidelines inherently did better than most of those who were fully invested. Yep, long-term buy-and-hold sure took it on the chin.
The Rule Breaker has never been advertised as anything but a high-risk portfolio, nothing less than a venture capital portfolio. Ask any VC and he will tell you that, give or take a few percentage points, he EXPECTS more than 90% of his investments to lose money, and that he will actually earn the majority of his returns on 1% of those investments made. This is why "price doesn't matter" for Rule Breakers, because so few of them are expected to succeed, and those that do will do so brilliantly. It is an aggressive, high-risk way to invest, one to which I would only allocate a small percentage of my capital.
Using such methodology, of course price is less valid than a firm grasp of how the company expects to make money. I have seen no one yet who has devised a good model for valuing Amazon.com (Nasdaq: AMZN), except for those who can make a pretty good case that it is zero (and, of course, Paul Commins' YGBFKM methodology). David can speak for himself, but I would like to say that of all of the messages of Fooldom, this one may be the one that has been most poorly communicated and thus misrepresented.
Technical Analysis is a simple science: It states that stocks that are in motion tend to stay in motion, that a stock that rose today is more likely to rise tomorrow. It is a powerful tonic for those who are terrified by the notion that short-term stock market movements are without rationality. Technical Analysis allows investors to say "Ignore the reasons, they are meaningless. Focus on the patterns." The pure technician ignores such basic concepts as stock value, price, or other fundamentals on the belief that the institutional investors leave telltale signs when they are moving into or out of a stock, and that the "smart money" telegraphs its actions by virtue of its sheer size.
This is a powerfully attractive theory, and I do not doubt that there are those who can practice it with some success. But these people are not the "average" technical analysts. They are, in fact, few and far between.
Ovarian Cysts No More
C
Thanks a lot Annjakl, very nice, specially:
Technical Analysis allows investors to say "Ignore the reasons, they are meaningless. Focus on the patterns." The pure technician ignores such basic concepts as stock value, price, or other fundamentals on the belief that the institutional investors leave telltale signs when they are moving into or out of a stock, and that the "smart money" telegraphs its actions by virtue of its sheer size.
Technical Analysis allows investors to say "Ignore the reasons, they are meaningless. Focus on the patterns." The pure technician ignores such basic concepts as stock value, price, or other fundamentals on the belief that the institutional investors leave telltale signs when they are moving into or out of a stock, and that the "smart money" telegraphs its actions by virtue of its sheer size.
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