Sentimental Thoughts

Ever wonder as to if technical analysis actually works? Last week Lehman Brothers said “Models (ours including) are behaving in the opposite way we would predict and have seen and tested for over very long time periods.” Wonder no longer.

Perception is reality on Wall Street, and that perception is changing awfully fast.

The Yen/AUD Carry Trade is now in full reversal.

Why Smart People Aren’t Rich

“I am more intelligent than most people. I have proved that throughout my life. I can now use my knowledge and intelligence in the stock market to gain an advantage over all those other idiots out there who think they know what they are doing, but don’t.”

Then everything goes to hell.

Moral: Everyone has emotions. It’s not about how smart you are, but how good you are at controlling emotions.

The “Short-Term”

Many hedge funds are said to be barring investors from taking their money out (as a matter of fact today was the deadline for requesting withdrawal for end of the quarter).

One analyst writes

Everyone seems to be caught up in the fear this decline has generated that they’ve forgotten that despite the 8% dip, the market had risen 14% off the March low. Before that the market had rallied 20% off the June 2006 low, only to correct 7% in March this year. Before that the market rallied 14% off the October ’05 low only to correct 8% into June ’06. You can see that these are just normal, healthy pullbacks in an ongoing bull market. Most investors get too caught up in the short-term market noise and in doing so they miss the big picture (where the real money is always made).

So, the market rallied off of March 2007, June 2006 and October 2005 lows. I really am dying to know where this guy was in 2000.

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