Reasons for continuously falling SP, page-23

morning all,

I borrowed this from the Science forum - thanks to poster tristanc.

"It's clear, liquid and cool, then you click the little metal button and it turns opaque, solid and hot. Clicking the button indisputably sets off ("causes") the reaction, but it doesn't actually provide the energy that drives it. That comes from sitting the pack in very hot water for 10 minutes or so. It's in what's known as a metastable state (like a marble in a shallow dip at the top of a hill). Leave it alone and it'll stay there, but give it a slight nudge and it'll go rolling down. The same is true of earthquakes, volcanoes and storms. The energy that drives them accumulates over a long period of time, (many years for earthquakes and volcanoes, days to months for storms), building and building until the slightest nudge (the proverbial butterfly flapping its wings) will set them off. In a sense we can say that the nudge "caused" the event, but it's really just the last in a long line of (mostly more important) causes - it certainly isn't what provides the energy making them so powerful."
Post #:17769612


To me - this is a very accurate description of why stocks (not just AJX) just don't move as a business moves - either up or down.

For those who believe that a stock should be moving up in the light of good business news or growth -- they should realise that if they believe that then they believe in 'efficient market hypothesis (EMH)'

Unfortunately - believing in EMH is pretty much the same as believing in the tooth fairy - even though for a child - there is often ample evidence of the existence of the tooth fairy.
There is no such evidence for EMH.

Stocks never did act within EMH - even less so now when humans don't run the market.

Stocks in the past - and, IMO - more so now - run exactly like those examples given in nature - earthquakes, volcanoes and storms. Ditto, the marble - everyone watches the marble - no one thinks about gravity.

The problem with all of this is that people who - 'play the stockmarket' or 'trade' or similar -

are always looking for the catalyst - the immediate apparent 'cause' of the event -

most never look for the real causes - the things and degree of things that cause the build up of pressure in the first place.

It's just like a fire -- most people only notice the fire when a spark (ignition) happens and the fire begins to burn --------- they do not notice the huge build up of fuel loading - nor do they notice the conditions - like hot dry winds bringing a combination of high temperature and low humidity and dryness to that fuel load.

Stock market players in general - just jump from spark to spark - or catalyst to catalyst - and, much more often than not - just keep burning their bucks along the way.

Alexium the business - is like a very full fuel load at the moment - just waiting for whatever will provide the spark.

It could be a much larger 4C - it could be a half report - ditto a post saying we are cash positive or neutral -- in reality it could be anything.

Also - exactly like the volcano or the fire or the earthquake - the catalyst may never be seen - it might just be a spontaneous ignition.

The difference in investments on the stock market is that the real winners - the big winners - like Buffet and his ilk -----

don't look for the catalyst at all ---------- they look for the background pressures.

Then, they just wait. In Buffets case - he likes to buy almost the entire mountain - a very large slice of the volcano - or a large part of the continent in the case of the earthquake - and, he doesn't give a toss when the catalyst happens - because he never intends to sell anyway - he always buys as if he is going to keep the asset forever.

I gave up a long time ago trying to pick the catalyst - why?

Because I worked out that the richest people in the world as individuals - never fished for the catalyst - they either watched the pressures and real causes - or they built them themselves and hence, made it happen.

With small holdings in companies that are tradeable - one can, at times - catch the marble when it begins to roll - or beat the lava to a safe place -- but, with large positions - that is impossible.

The current coming season of 'potential' events that will start the action is getting very close - so, long term holders can just sit back and wait for the curtains to be drawn and the show start - all that is really a mystery - is how long will the suspense go on for and how big will be the explosion when the fireworks start.

That's the suspense part of it - we can hear the deep music in the background building - but, we just don't know how long the buildup will be - nor do we know when the crescendo will happen - or, if it will indeed be one of those very very long notes one hears that goes on forever.

have a great sunday all