From: gts (gts_2000@yahoo.com)
Date: Sun Jun 15 2003 - 19:53:00 MDT
Dossy wrote:
> On 2003.06.15, Olga Bourlin <fauxever@sprynet.com> wrote:
>> Use those stops, people.
>
> Use them in both directions, if you're not able to constantly monitor
> your portfolio.
Stops are an absolute waste of money. In the long run they only make money
for the brokers.
They are valuable to investors only if stock prices trend, but countless
studies show that stock prices do not trend. Price trends are an illusion.
Those who don't believe me can try a simple experiment: set up a spreadsheet
to compute a random daily high, low and close on an imaginary stock. This
can be done quite easily if you know how to use Excel or any other
reasonably advanced spreadsheet program. Compute the cumulative data for,
say, 500 days. Plot those 500 days of data on a chart. You will see plenty
of apparent price trends. It will look exactly like any stock chart. You
will see "trend lines", "head and shoulders" patterns, "trading range"
patterns, "break-outs," etc.
While this experiment won't prove conclusively that real stock prices don't
trend, it should give you pause to think and (I hope) set you on the right
path to understanding the truth about the market.
-gts
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