it's the guy that runs this place.... <a hrefr="http://www.bigidea.com/default.htm"> <img src="http://www.bigidea.com/videos/penguins/pn003/images/still08.jpg"></img></a>
4 small positions.....shorted some qqq's on the close just so I can sleep ... but yeah, net long hoping for at least a "dead cat bounce" if not a real bit of bargain hunting Mon am (which is my hope and my belief). I think the selling was overdone, then exacerbated by options expiration
i think the contrarian thing is a cliche that has some truth to it but is too much of a generalization to have real value. rather than say 'the crowd is always wrong,' i think it would be more accurate to say 'the crowd always stays too long.' (hey i'm a poet and didn't even know it). the public is occasionally right on the direction of the move, they just don't know when to get out. the action of the crowd actually creates the problems that the crowd endures. think of the crowd as one big giant trader who always buys thousand lots in a thin market. he can bully the market for a while, get it rolling nicely. but he will always run the price on himself in the end, because there is no one there to absorb his exit. thus he can be right for a while, but he can never win because he always gives it back. i think that snapbacks from extremes are better explained by the principles of mean reversion. if you stretch out a rubber band, what's it going to do? usually some extreme event causes a panic reaction. being on the sidelines of a panic reaction allows one to step in with a cooler head. i think pros are just prone to panicking as the average joes. it doesn't even have to be an emotional thing, it could just be a coincidence of a long chain of stops getting triggered at one level after another. can't avoid this sort of thing in a game with thousands of players where everyone is blindfolded. you have a bunch of guys who feel small amounts of emotion individually, and that emotion snowballs into a crescendo. i don't think there are a lot of traders out there who are really, really stupid either- idiots have short financial lifespans and thus never make up more than a small percentage of the population. they are like lame gazelles, quickly and easily picked off by carnivores who always go for easy prey. there are investors like that, but their contributions are tiny. the last major group of morons are the ostrich headed mutual funds, and those guys are getting their comeuppance fast. net capital outflows will put the real dumbdumbs out of their misery eventually. i look at what the crowd is doing because it's important to know, but i think its bad to assume they are always wrong. they will always be wrong eventually, sure, but it might not happen for a while. better to step back and look at all the elements as a whole, then make a decision from there. be a contrarian by believing in yourself at all times. sometimes you're with the crowd, other times you're against them- true contrarianism is not caring.
Oh man, you're starting to screw with my plan now! I was thinking the same thing...if so many think Lundy's wrong, he may very well be right. I'm not buying and holding but I'm looking for a nice bounce beginning Monday or Tuesday.