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cadillac107

08/09/12 12:30 AM

#3784 RE: errett #3780

This question you have raised would make a wonderful Ph.D disertation. Unfortunately, this board is not the place for me to respond in great detail. Briefly, although the market is indeed a human institution, it nonetheless is an unemotional entity. It cares nothing about the individuals who enters its domain, be they tall, fat, or skinny, male or female, or what ethnicity or academic background they are from. Indeed, it welcomes all players, and will reward or punish them, based solely upon their own individual performances. Unfortunately, investors being the emotional people that we are, often times have difficulty in keeping our emotions under control after we place our chips down. Such negative emotions as greed, fear, and hope, often influence our decision making ability in the market place. For this reason, beside fundamental and technical stock research, the psychological school of thought must also be considered. Psychologists tell us that our pattern of making decisions in the stock market is directly correlated to our daily behavior. For example, individuals who display a high risk tolerance level in their daily lives, most often are attracted to the more speculative stocks, whereas more conservative individuals, tend to seek out more stable safer investments vehicles.
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jsous

08/09/12 10:01 AM

#3804 RE: errett #3780

I agree with all your points except the implication that the resultant anxiety from severe downward price movement is illogical. I would argue that it would be illogical NOT to be anxious about a downward movement ahead of what you believe is a positive event.

Also, I am no expert or seasoned veteran, but I have been around enough micro caps to know that often there are people and institutions that know things before the regular joe's holding common. Yes, this exists all of the market, but it is more apparent in low volume micro caps. Therefore, a major downward price movement before an event makes me think someone knows something I don't. They are playing with information I don't have. This happens all the time and to be honest, does in fact scare me a bit.