Why do you need to know why?

Discussion in 'Psychology' started by afto, Apr 5, 2010.

  1. afto


    Its like listening to the talking heads explaining that the market did such and such today because of such and such. Does it really help anyone?
    The assumption is that news moves prices. Personally I think its the other way around. The "news" is usually the excuse for the move and not the cause.
    For example, there are a gazillion reasons why this market should not be closing in on 11000 and yet it is. So why bother trying to guess when its gonna drop?
    If and when it does - it does. Deal with it and don't worry about it.
    The best traders, imo, are those that watch and respond to price.
    I turned CNBC, and its ilk, off long ago. I'd rather watch old clips of Laurel and Hardy....better for your health ;-)
  2. maxpi


    uhh..... people assume a lot about traders that isn't true. Like we are glued to the news? No way, I never watch any pundits at all... I check out the economic releases to tell if a day is going to have enough volatility to trade index futs and that's it... my local paper is owned by a woman that is an animal rights person. New York City could be swallowed by a hole in the ground and the paper would have a horse rescue story on the front page.. I read that paper religiously because it's a fun read... that's about it for the news... oh wait, the paper has Sudoku and Word Scramble, and Funnies, that stuff is good sometimes too...
  3. We who look at charts to trade know the effect but typically not the cause of a move. And knowing the cause, if it is even knowable, does not make any difference.

    Market goes up, market goes down. I trade it just the same and have no need to spend time to learn "why".
  4. I disagree... I don't listen to pundits, but I always want to use my own analytical faculties to understand why. Without knowing the answer to this and two other relevant questions, I would never enter a position.
  5. afto


    Yes, thinking is allowed and of course I'm not saying that you can't be successful in making an educated guess about the future direction the market takes. Some call it fundamental analysis (insert smiley face here)
    Personally though, I find that the news, and particularly the news industry, is a distraction at best. However whatever floats your boat is always best.
    And in light of the recent avalanche of "I have seen the top and it is here" posts it seems to me that prediction is quite unnecessary.

    Reminds me of the one about Einstein going to Heaven. He's stuck there in the waiting room with three guys.
    The first introduces himself as a physicist with an IQ of 140. "Great, lets talk Physics" says the great man.
    The next guy introduces himself as a mathematician with an IQ of 120. "Fantastic, lets sit down and talk Math" replies Einstein.
    Then the other guy offers his hand and says that he only has an IQ of 85.
    "That's fine" replies Einstein, "So where do you think the stock market is headed to?"

  6. Usually, Why is the last W on the bus. Oftentimes, the bus leaves without any apparent trace of Why. So if you always wait for Why, you'd better be good at playing catch-up.
  7. Are the Pundits not rationalizing what the market has already done?

    If Obama farts and the market drops then the pundits come up with a reason why. Everybody was standing down wind and had to move quickly to stave off the unpleasantness. If the market goes up the reason becomes that it really wasn’t as bad as expected and it doesn’t look like he’ll do it again however some of the more prudent fart smellers have moved to the upwind side anticipating that he might cut a big one.

    Tell me what happened and I'll find a reason why.
  8. A few things... Depends on the kind of news you can get a hold of quickly. Are you on the floor hearing that a few major funds are getting in this side of the market RIGHT NOW?! Or the latter are you hearing the general population stuff that could probably be explained with tech analysis over the last few days...or weeks etc... Overall though you shouldn't trade on the basis of what you think it's about to do. Stand aside until you know what it will...
  9. Redneck


    :p How True

  10. ammo


    it;s a security blanket , a toddler knows its parents are in the next room, but has to have the blanky to go to sleep,you know intuitively whether we are going up or down,but it's nice to have some corroboration somewhere
    #10     Apr 7, 2010