Browsing Category: "investor mentality"

Shift in Investor Mentality Being Once Again Revealed

Tuesday, January 13th, 2009 | Dow Jones, investor mentality, market report with No Comments »

With uncertainty about the future of the economy and in particular the indexes sweeping, traders are again sending mixed messages and the markets are flattening out.  Several months ago, the markets were dropping over 200 points and investors said that the markets were down modestly..  Now I’m not so sure if thats modest considering that when the Dow was inching up in 2007, any movement over 1.5 percent was shocking for the day.  I think that we are getting back to that type of mentality.   Today the markets traded between nearly one percent up and about one percent down.  Nevertheless the end result was a flat market with the Dow ending down just .3 percent and the Nasdaq up just .5 percent.  To extend the mentality of today to a longer lens, this shift in investor mentality from panic to uncertainty has been ongoing since early October as the Dow’s price has remained in the range from 8000 to 9300 with the exception of a three day period when the auto bailout did not pass and when Geithner was chosen the following day.  Futhermore, if you simply examine the period from November 25th (the monday after Geithner was chosen) til now, you will realize that the Dow Jones has remained between 8200 and 9000 a very narrow margin of just over 8 percent change from its peak to its bottom.  The dynamics of our economic times are transforming and even while bad news continues to come out as before, the markets are not reacting in the panicked method that they behaved with prior to this remarkable stabilization.  Consequently, one realizes that while what I’m saying may seem like blind optimism, a period of nearly 50 days in which the indexes have acted remarkably stabily may be a period of stabilization prior to economic growth.  Hence, if you see this as market stabilization then you must also see this as a buying opportunity since after a period of uncertainty and stabilization, there is inevitably a period of growth and a return to the mean in terms of economic stability (just look at the previous recessions or economic downturns and a trend will be seen).