Comments on: Why You Should Write Off September http://www.tradersnarrative.com/why-you-should-write-off-september-1806.html Freshly squeezed market commentary & analysis Sun, 08 Nov 2009 04:55:17 +0000 http://wordpress.org/?v=2.0.2 by: Carnival of Financial Learning #15 - Google Timeline Edition | Financial Learn http://www.tradersnarrative.com/why-you-should-write-off-september-1806.html#comment-34718 Sun, 07 Sep 2008 16:38:33 +0000 http://www.tradersnarrative.com/why-you-should-write-off-september-1806.html#comment-34718 [...] Babak presents Why You Should Write Off September posted at Trader’s Narrative, saying, “Watch out for September! This has historically been the worst month for the stock market.” [...] […] Babak presents Why You Should Write Off September posted at Trader’s Narrative, saying, “Watch out for September! This has historically been the worst month for the stock market.” […]

]]> by: Johan Lindén http://www.tradersnarrative.com/why-you-should-write-off-september-1806.html#comment-34694 Thu, 04 Sep 2008 12:07:14 +0000 http://www.tradersnarrative.com/why-you-should-write-off-september-1806.html#comment-34694 I think I wrote it above. If not, it's psychology! Anyone who has read economics 101 knows that what decides the value of a business is the discounted cash flow together with the implicit market capitalization rate (what yield is demended) for that business. The later is value totally decided by psychology. When people are afraid they demand a higher yield (compared to the 1 month gov. bills) than when they are content. These are totally subjective values that nobody can count on explicitly. There's only an implicit value which the market as a whole decides upon. The first part of the equation, the earnings or cash flow is also partly dependent on psychology. I.e. If people are afraid that luxury car isn't that interesting any longer. It is strange that so few are aware of this economic 101 FACT. And I'm not talking about moms and pops, I'm talking about so called economists who don't know jack! I think I wrote it above. If not, it’s psychology!

Anyone who has read economics 101 knows that what decides the value of a business is the discounted cash flow together with the implicit market capitalization rate (what yield is demended) for that business.

The later is value totally decided by psychology. When people are afraid they demand a higher yield (compared to the 1 month gov. bills) than when they are content. These are totally subjective values that nobody can count on explicitly. There’s only an implicit value which the market as a whole decides upon.

The first part of the equation, the earnings or cash flow is also partly dependent on psychology. I.e. If people are afraid that luxury car isn’t that interesting any longer.

It is strange that so few are aware of this economic 101 FACT. And I’m not talking about moms and pops, I’m talking about so called economists who don’t know jack!

]]> by: Babak http://www.tradersnarrative.com/why-you-should-write-off-september-1806.html#comment-34692 Thu, 04 Sep 2008 04:19:47 +0000 http://www.tradersnarrative.com/why-you-should-write-off-september-1806.html#comment-34692 gold? take a <a href="http://news.tradersnarrative.com/links/The_Mr_T_Gold_Indicator_I_pity_the_goldbug?c=0" rel="nofollow">look at this</a> :) gold? take a look at this :)

]]> by: Moyo http://www.tradersnarrative.com/why-you-should-write-off-september-1806.html#comment-34691 Thu, 04 Sep 2008 04:14:31 +0000 http://www.tradersnarrative.com/why-you-should-write-off-september-1806.html#comment-34691 point taken Babak, however the S&#38;P doesnt look like it can sustain a rally, there doesnt look to be any fundamental support for upward price action in the S&#38;P. The S&#38;P has not gone anywhere since June, and with the continuous drop in oil, it hasnt been able to sustain a rally. All of that are bad signs to me, i'll continue to watch it however :D What are your thoughts on Gold and the USD? point taken Babak, however the S&P doesnt look like it can sustain a rally, there doesnt look to be any fundamental support for upward price action in the S&P. The S&P has not gone anywhere since June, and with the continuous drop in oil, it hasnt been able to sustain a rally. All of that are bad signs to me, i’ll continue to watch it however :D

What are your thoughts on Gold and the USD?

]]> by: Babak http://www.tradersnarrative.com/why-you-should-write-off-september-1806.html#comment-34689 Thu, 04 Sep 2008 03:01:55 +0000 http://www.tradersnarrative.com/why-you-should-write-off-september-1806.html#comment-34689 Johan, so if not supply/demand, what then drives the market? Moyo, yup, September is the worst month historically, but that doesn't mean that history will repeat - it will more likely rhyme ;) Johan, so if not supply/demand, what then drives the market?

Moyo, yup, September is the worst month historically, but that doesn’t mean that history will repeat - it will more likely rhyme ;)

]]> by: Moyo http://www.tradersnarrative.com/why-you-should-write-off-september-1806.html#comment-34679 Tue, 02 Sep 2008 21:18:41 +0000 http://www.tradersnarrative.com/why-you-should-write-off-september-1806.html#comment-34679 I never knew there was a historic re-occurrence of September being a bad month for the equities, it just looked to me today that tomorrow will be a bad day, since today's trading set up for that. Since June the S&#38;P has been range bound and the equity market doesn't do well with range bound trading..... I guess now i'm more excited about taking my short position for tomorrow I never knew there was a historic re-occurrence of September being a bad month for the equities, it just looked to me today that tomorrow will be a bad day, since today’s trading set up for that.

Since June the S&P has been range bound and the equity market doesn’t do well with range bound trading…..

I guess now i’m more excited about taking my short position for tomorrow

]]> by: Johan Lindén http://www.tradersnarrative.com/why-you-should-write-off-september-1806.html#comment-34677 Tue, 02 Sep 2008 20:34:43 +0000 http://www.tradersnarrative.com/why-you-should-write-off-september-1806.html#comment-34677 I sure don't think that cash flow is so much different during this time, but I think coming back from holidays have a psychological impact. That the price of markets is decided by supply and demand is just totally BS. It's easily proven that that is not the case. Say for instance that during the hours the market is closed. Something very negative happens. When the market opens the demand/buyers and supply/sellers might decide that the right starting price is 10% lower than the previous day. The demand to buy or the supply of selling is actually not changed at all. Still people think that! That's annoying! But I guess, that's why some people make all the money and most people don't. ;) I sure don’t think that cash flow is so much different during this time, but I think coming back from holidays have a psychological impact.

That the price of markets is decided by supply and demand is just totally BS.

It’s easily proven that that is not the case. Say for instance that during the hours the market is closed. Something very negative happens. When the market opens the demand/buyers and supply/sellers might decide that the right starting price is 10% lower than the previous day.

The demand to buy or the supply of selling is actually not changed at all.

Still people think that! That’s annoying! But I guess, that’s why some people make all the money and most people don’t.

;)

]]> by: Babak http://www.tradersnarrative.com/why-you-should-write-off-september-1806.html#comment-34675 Tue, 02 Sep 2008 19:35:57 +0000 http://www.tradersnarrative.com/why-you-should-write-off-september-1806.html#comment-34675 Tim, yes, of course :) my point was regarding the tone of the market - whether you're going long or short, it is helpful to know the current that underlies the market. Johan, yes, it could be a combo of psychological and holiday bill paying - although I've also read some time ago research which argues that it is the fault of mutual funds which have their fiscal year around September. The market is much too large to be pushed around by a few people selling to pay for christmas gifts, don't you think? Tim,
yes, of course :) my point was regarding the tone of the market - whether you’re going long or short, it is helpful to know the current that underlies the market.

Johan,
yes, it could be a combo of psychological and holiday bill paying - although I’ve also read some time ago research which argues that it is the fault of mutual funds which have their fiscal year around September. The market is much too large to be pushed around by a few people selling to pay for christmas gifts, don’t you think?

]]> by: Johan Lindén http://www.tradersnarrative.com/why-you-should-write-off-september-1806.html#comment-34668 Tue, 02 Sep 2008 13:16:54 +0000 http://www.tradersnarrative.com/why-you-should-write-off-september-1806.html#comment-34668 I think it is easy to find an explanation for WHY September is a bad month. Same reason as why post-holiday DAYS are usually bad. Pre-holidays and holidays (read August) are usually good months. People are glad because of the vacation. Post holiday people get more realistic again and also they might need to sell when they get their final bills for the holiday. That's an easy to understand reason. I think it is easy to find an explanation for WHY September is a bad month. Same reason as why post-holiday DAYS are usually bad.

Pre-holidays and holidays (read August) are usually good months. People are glad because of the vacation.

Post holiday people get more realistic again and also they might need to sell when they get their final bills for the holiday.

That’s an easy to understand reason.

]]> by: Timothy Sykes http://www.tradersnarrative.com/why-you-should-write-off-september-1806.html#comment-34661 Tue, 02 Sep 2008 04:03:58 +0000 http://www.tradersnarrative.com/why-you-should-write-off-september-1806.html#comment-34661 LOL, learn to short sell and you'll look forward to Septemeber, as i do....i'll never understand these "market players" who learn the forehand and not a backhand LOL, learn to short sell and you’ll look forward to Septemeber, as i do….i’ll never understand these “market players” who learn the forehand and not a backhand

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