subscribe: Posts | Comments

Trading: the long and the short of it

If you can keep your head while all around you are losing theirs, you’d probably make a good investor. Times of turbulence on stock markets can be times of opportunity for the savvy investor. Picture the scene last week. City traders losing X billion pounds a day and having to cancel the order for that third gold-plated Porsche. Pension fund managers taking one look at their huge losses and… shrugging because it’s not their money. Uninformed media sources proclaiming the end of the world. Meanwhile, you could have been quietly sitting at your computer, raking in the cash. Most people are aware that to be successful at investing you should buy low and sell high. What fewer people...

posted on: Jan 25, 2008 | author: Alex

Irrational exuberance and the madness of crowds...

The title of this article combines comments by Alan Greenspan about the stock market boom of the 1990s (”irrational exuberance”) and the title of a book by Charles Mackay. The book, “Extraordinary Popular Delusions and the Madness of Crowds”, is a short but interesting one, covering those aspects of human psychology, sociology and politics that lead to what are known as bubbles. A bubble is loosely defined as what happens when the price of a particular class of item breaks away from fundamentals and, in effect, goes up because everyone expects it to go up. We’ll rewind a bit here and take a look at the way markets usually work; all markets, not just financial ones. Company A...

posted on: Nov 25, 2007 | author: Alex