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downsideup

01/02/09 3:48 PM

#6822 RE: was CA$H #6821

I just posted in reply to the last prior post... and figured you wouldn't mind and that those here would know where it fit in the flow...

It is TOO obviously the case that the time frame of relevance in analysis matters in your charting... and an "uptrend" can be defined as the pattern over the last decade... or the pattern over the last ten minutes... all as a function of the relevant time frame in which you are choosing to operate your trading effort against the dynamic of the market... whether "buy it and sock it away" is the focus... or trading for fractions of a penny in a few seconds using a program. Picking and choosing time frames on charts in order to game your past calls and past performance after the fact isn't useful... as the right tool for doing that is your account balance. The only utility is in the NON-relativistic sense of pairing the time period of relevance with the method you are applying...

I've called a bottom here twice... as a matter of record... and you can do what you like with that and your own choices in choosing chart patterns to look at, I guess... but, don't delude yourself with charting by detaching your analysis and the history of your calls from actual results ?

"Investors" are just traders with a longer term chart focus... one in which the fundamentals of the business and changes in them will "tend" to matter far more, in time, than the random vagaries of the market. I think most investors and traders are broadly unaware of how much of a stock price can be and often is almost totally random... a function of patterns of noise within a fairly broad range... a range within which the stickiness of investors and traders application of relative values to current price becomes far more important than any other factor in price.

I can show you MANY instances of undervalued stocks that stay undervalued only because of value expectations tied to current price... which you will often see result in quite large, discontinuous changes in stock prices, with the changes tied to change in awareness of events and the value implications of them... rather than the events themselves or the announcement of them. "Great news !!!" for a patient long... might not be reflected in others appraisal for a long time, particularly in issues that are "under-followed" ?

If you think a stock trading at $0.02 means the PRICE applied in any one trade makes it therefore WORTH only $0.02... you don't fully understand what it means that markets ARE inefficient... which you need to understand in order to make the inefficiency of the market a net benefit rather than a looming risk.

Investors try to ignore some aspects of the noise in variations within that overly wide and under-appreciated range or normal... to focus on the potential for business creation of value that will require time to recognize. Investors are often said to look for undervalued stocks, but really they are looking for undervaluation of company ability to realize unrecognized and undervalued potential. That doesn't mean the price variation over some period of time doesn't matter... it just means that there is always more than one function ongoing with different relevant time frames, and therefore always more than one time frame of relevance to consider in your analysis of price and price variation. It IS complex... and there is value in understanding how complex... and in trying to figure out how make that complexity work for you...