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Originally posted by Goodfella58
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I have read your analysis on the other thread and can't say I disagree with much of it.However you are looking long term and I'm looking at the short term price movement.With a long term view you are relying on fundamental analysis but you do not factor in that in the short term the market is a voting machine not a weighing machine and when investors are gripped by fear instead of greed fundamentals go out of the window.I I have included some quotes of famous investors including the man himself Warren Buffet.The most human powerful human emotions are fear and greed and when investors are gripped by fear they make irrational decisions.They may be triggered by margin calls, or just a flight to the safety of cash, and when everyone is trying to get out at the same time people hit the panic button. Greed has been overtaken by fear.So despite your belief that stocks cannot trade below cash value when the next leg down comes many investors including yourself will start to question yourself and wonder have the banks reconsidering their warehouse facility There be many reasons for this, a dramatic revaluation of the business model or the banks own liquidity problems.In other words, the market is not a weighing machine, on which the value of each issue is recorded by an exact and impersonal mechanism, in accordance with its specific qualities. Rather should we say that the market is a voting machine, whereon countless individuals register choices which are the product partly of reason and partly of emotion.Hence the prices of common stocks are not carefully thought out computations, but the resultants of a welter of human reactions. The stock market is a voting machine rather than a weighing machine. It responds to factual data not directly, but only as they affect the decisions of buyers and sellers.The market is a voting machine, not a weighing machine. It registers and reflects the thousands upon thousands of personal opinions about tomorrow. It swings high and it swings low on the facts and fancies that move men to investment action“The excellent performance of the stock market, which surprised nearly all the experts, is a reading on consumer confidence. To put it another way, the stock market is a voting machine, not a weighing machine.“In other words, Buffett specialized in finding “undervalued” issues on the market. Such opportunities arise occasionally, he says, because in the short run the stock market acts like a “voting machine” (reflecting all kinds of irrational attitudes and expectations), while functioning in the long run more like a “weighing machine” (reflecting a firm’s true value).This is all of course that I am correct in assuming fear will replace greed as I am measuring this as a bear market rally. I don't believe the US and other Government money printing exercise will reinvigorate consumer spending but will merely go to repairing household balance sheets.I am expecting this rally to end within eight trading days and I will very quickly know if I'm wrong.
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I took a short-term view when I sold all my shares in late February and early March. I took a long-term view when I bought shares back in late March, early April. In particular, why Afterpay was such a strong buy at $10. The market sentiment that dropped Afterpay from $40 to $8 would have included the fact that there is an expectation of slower growth and higher bad debt charges and the possibility of slower geographic expansion.
