Like in the bear market starting 2000, what caused the bull market to start falling suddenly when there was optimism, ALMOST in everyone. I am not concerned with a certain bull market, but any general one is ok.
2006-06-13 10:44:44 · 6 answers · asked by boxer111 3 in Business & Finance ➔ Investing
What’s happening now is short-term B.S. caused by an inexperienced Fed Chairman, and mutual funds (growth portfolio’s) unloading holdings at the Dows all time high a few weeks ago. Every investor has a trigger price. They figure out what price to buy and what price to execute a sell trade. Great investors buy great stocks when the price is low and sell when the price is high, then buy the same stock when the price is low. This is basically what’s happening now.
The same thing happened in 2000. Smaller investors got burned at the expense of smarter and bigger investors. Smart investors new that companies in 1999 were trading 200 to 400 times there earnings, however people kept buying. They (smart investors) invested in these companies, let the money ride for a while, and started to sell off when the train started slowing down. Then mutual funds and institutional investors followed. They realized that tech company XYZ never made a nickel, but their stock price was selling at $200 a share. By the time this was exposed to the average investor it was too late. All that market was, was smoke and mirrors, and a lot of rich people got richer.
Inevitably, people control the market. There’s no huge computer throwing random quotes out. People decide the price, just like EBAY.
If your rich play the market. If your average, build wealth, and invest in mutual funds.
2006-06-13 11:33:52 · answer #1 · answered by Will 2 · 0⤊ 0⤋
There is a problem with your assumption. There was not optimism everywhere. If you look through the business newspapers and magazines for the previous year, they were full of articles that asked the question "When will the Tech bubble burst?"
If you look at the flow of money, you will see that the smart money got out ahead of the bubble bursting. For example, there were lots of IPOs of high tech companies. Many were underpriced -- giving large gains on the first day. If you look closely at the firms that had big run-ups, you will find that many went public too soon. Why were they brought out too soon? because they were the ones that were backed by venture capital, and the venture capitalists realized they had to get out while valuations were still high.
2006-06-14 00:55:09 · answer #2 · answered by Ranto 7 · 0⤊ 0⤋
As the world economy continues to grow, more people than ever are turning to the stock market in an effort to find ways to make their money work for them. Unfortunately, not everyone is able to master the market effectively. To help you to make sure that you get the most out of your investments, the information below will provide tips for when, how, and if you should invest.
Be Sure that You're Ready
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http://umgarticles.atspace.com/stock-market.htm
2006-06-19 23:54:49 · answer #3 · answered by Anonymous · 0⤊ 0⤋
It may be not appropriate to quote but there is a saying a dog which barks will not bite. Those people who trade with huge money don't talk. They just take the opportunity to buy or sell. 90% of the people are wrong. As long as they are correct, they go on buying, will not divert the funds.
Read comments at uscommoditiestrader.com
2006-06-13 11:19:46 · answer #4 · answered by Onceuponatime 2 · 0⤊ 0⤋
When every buyers have already bought, no more buyer will come in to push prices higher. Then the natural consequence is for sellers to show their strength. Whatever event that trigger the selling is secondary. This is just a behavior of the market.
2006-06-13 10:53:36 · answer #5 · answered by SK 1 · 0⤊ 0⤋
You really need to read about the Tulips if you want to know more.
2006-06-13 13:26:10 · answer #6 · answered by Anonymous · 0⤊ 0⤋