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Nonsense Unltd.

July 19, 2009

Markets bounce back on recovery signs in global economy

-Livemint, July18,2009

Divestment plans, earnings take Nifty close to 4400

-ET,July17,2009

Its humorous, funny and interesting at times to note the different theories being floated on seemingly the same market action. Its depressing too. But I have gone my own cycle of emotional evolution, from disbelief to distress to disgust to disenchantment, finally ending with “distance”.  I was leafing through Daily Speculations when this article by Victor caught my attention. He quoted a source, an Indian media doubtlessly, its Bloomberg ,no less which attributed monsoon to be the culprit behind the 3% or so drop in one day.

To the same, article, a very insightful and fantastic comment was put by Mr. Dhananjay. For me, I couldn’t have put these thoughts any better. Read the comment there. For the common benefit I am quoting it here:

As a trader from India my permanent companions are PracSpec, EdSpec. Bloomberg’s reports remind me of PracSpec Page no 173, Chapter 7. Journalists trying to find reasons and retrospective explanations after market hours do the maximum damage and disservice to the ever gullible investors. Indian Market ( NIFTY ) corrected 15% in last week. Journalists find lot of proximate reasons like Union Budget, Monsoons etc which are descriptive not predictive. I also deeply wonder how financial commentators try to provide explanation for insignificant moves of 1% or less in a stock and the same reason for both down and up moves . This indirectly shows even if the market participant correctly knows the news beforehand it is difficult to predict the market reaction to the news. As a follower of this forum whenever I try to explain this subtle difference to many my fellow traders , they refuse to listen and stubbornly seek an explanation for market movement instead of hypothesizing Path of least resistance and managing the risk ( via stop loss or Position Size or non directional bets ).

Many worthwhile ideas like

1. Market trying to capture as many players with it
2. Concepts from TORTURE
3.Market going to extremes causing maximum pain to maximum participants as a way of maintaining market ecology

which are understood from this forum act as a torch for understanding market machinations and mysteries.

The Emphasis all mine. I hope, the gullible investors start applying their brains once in a while{I dont demand much, just once everytime before they press the “buy” button. They never sell, btw} and you can see CNBC running for their money.

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5 Comments leave one →
  1. July 20, 2009 8:13 am

    Media works with the concept that every reaction should have some action / reasoning behind it. Hence, when markets are bullish, they find bullish reasons and when bearish, bearish reasons. Ultimately, its as if, markets depend upon the news provided by the great media to make the moves 🙂

  2. July 21, 2009 10:35 am

    Similar to what Dhananjay said. They are descriptive and not predictive!

  3. July 23, 2009 8:23 pm

    Dear Soham,

    I appreciate very much your kind comments. We all feel blessed to be standing on the shoulders of giants like Dr Victor Niederhoffer, Dr Brett Steenbarger.

    Gangineni Dhananjhay

  4. July 23, 2009 11:37 pm

    Muchas Gracias, Senor 😉

  5. August 3, 2009 8:38 pm

    Excellent post!! I remember one nice quote, “Don’t think about what the market’s going to do; you have absolutely no control over that. Think about what you’re going to do if it gets there.” – William Eckhardt.

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