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Old August 7th, 2017, 07:40 AM   #1
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Market Psychology

Stocks going up and down is the result of supply and demand. Demand is people wanting to buy. Supply is people wanting to sell.

The price is the measure of the balance between these two forces. The price represents an average of everyone making their individual decisions. It as an old cliche to say that fear and greed are what drive the market.

What makes people afraid? They are are afraid the market will go down and their assets will lose value.

Greed? People like to be able get what they want.

Described this way it certainly seems silly to place our financial security at the whims of a fickle mob. Yet over the long run this systems works out almost all the time. Sometimes the market becomes an irrational mob. Too many people buy at once creating a bubble. Sometimes too many sell at once creating a crash.

But hopefully underneath the psychology there is something supporting the value of the market called fundamentals. Fundamentals consist of hard assets owned by a corporation and income those assets produce. When fear overruns the fundamental value that is for savvy observers of the market a buying opportunity.
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Old August 7th, 2017, 02:19 PM   #2
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The stock market is often discussed in terms of bulls and bears. Bulls being buyers and bears being sellers. More bulls than bears and prices go down. In the reverse, prices go up.

This metaphor has limitations. Sometimes When the market goes down it might be described as bears entering the market. This may not be the case. It may be buyers stayed away, not that more sellers showed up.

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Old September 1st, 2017, 11:50 AM   #3
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Markets can run away from themselves on psychology. By this I mean people think because something went up yesterday, it will go up tomorrow. This herd mentality can send the bulls running towards a cliff.

The cliff is when it is discovered that the market value has run way past the underlying value of the asset being traded.
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Old September 1st, 2017, 11:55 AM   #4
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This system crashes roughly every 53 years.
Regulation can extend the time between crashes, and mitigate the effects of the system, which can be quite brutal on people.
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Old September 1st, 2017, 12:10 PM   #5
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After a crash the effect of fear can create a distortion between the market value and the fundamental. This is a profit opportunity.
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Old September 1st, 2017, 01:00 PM   #6
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Quote:
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This system crashes roughly every 53 years.
Regulation can extend the time between crashes, and mitigate the effects of the system, which can be quite brutal on people.
Yes it does, that is why God said every 49 years you should have a year of Jubilee to prevent the downturn.
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Old September 1st, 2017, 02:08 PM   #7
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Yes it does, that is why God said every 49 years you should have a year of Jubilee to prevent the downturn.
All debts forgiven, all property evenly divided, sounds like God is a socialist, doesn't it?
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Old September 14th, 2017, 06:32 AM   #8
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What would the effect of an emp blast over the US have on the value of bitcoin?
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Old September 19th, 2017, 11:40 AM   #9
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Yes it does, that is why God said every 49 years you should have a year of Jubilee to prevent the downturn.
The concept of a jubilee or debt moratorium was common all over the ancient world, but seems to have disappeared in the age of modern banking, where banks essentially create fake money and use its future debt obligations to end up owning most of the real assets-land, real estate, resources etc. in every society. And the last thing they want is to be stopped from squeezing more blood from a stone!
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Old September 19th, 2017, 11:47 AM   #10
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We're coming up to the 150th anniversary of Capital by Karl Marx...who discovered back then that capitalism is not a stable economic system to begin with and is prone to booms and busts as well as monopolies of production and ownership...which we sure as hell are seeing today!
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