Why 1100?
Why 1100 is important? Isn't it just another number? Well, it is just another number, but it is also a round number, a benchmarking number, a sign to enhance the herd psychology to get confident and yell that "this time is different!"
It is because it is a round number, people tend to take it as a benchmark. Mass media, will use this number to exaggerate the performance of stock market, to make their news more sellable. The crowd, however, once attracted to a new event, tend to involve in the event. Referring to my recent post, note that the crowd will not be able to explain their shift of attention. Mass media is very important, they will attract new investors (particularly those who are new to the market and those who have a hope or a desire-greed) to the market. Human mind is strange, once they are exposed to something, they tend to involve in the something.
Mass media, is just like another marketing agency, a strong advertising mechanism to invoke the public interest to buy stock (product). (Stock, of coz, is a product as well. Rarely, successful businessman wish to share their profit with the public. And of coz, why they need to do so in the first place? Stock market, is a great place for them to sell a so-called investment or equity ownership to the public.) As such, logically and psychologically, when you receive IKEA catalog, it is likely you are going to IKEA soon. If you are not going, other will go as well. And in stock market, the expectation that other will go will induce those who do not intend to go initially, to go to IKEA as well.
Why is the 1100 important? Because it is important by itself. Why the price rising in stock market is important, it is because the rise in price is the element that lay the foundation for the future rising of the price itself. It is just a feedback loop, a so-called naturally occurring Ponzi scheme by Robert Shiller. It is more important if the 1100 figure is shown in the newspapers headlines and induce word-of-mouth and feedback effect among the crowd.
It is the crowd that pay you a big profit in the market. Ultimately, what do you think... Is it (1) the 5% rise in EPS in the company itself or (2) the crowd that get frenzy and pay you a 50 PE for the stock that they wanna buy, which will make you gigantic fortune?
4 comments:
Booffett - the academician. :P
Okay I understand your point - and previously I used to have the same mindset.
What changed my mindset is this:
1. From TA point of view, the 1,100 has no meaning. 1,104 yes. 1,100 no.
2. From FA point of view, 1,100 has no meaning either. What if CI is at 1,098? Its only 2 points away and its less than 1% of its value. Does it mean that the sentiment is less bullish?
3. Media has a way of publisizing nonsensical nonsense, one such as this. No meaning to serious investor/trader.
4. Even if laymen (and women) joined in the fray, it does not give much impact to the volume either. At least, not in this market condition. If CI reaches 1,300 probably. Not 1,100. Retail participation is so miniscule that it would not impact that much. Our KLSE total market capitalisation would not be impacted by such insignificant amounts.
But why 1,300 would have impact? Because then, really any Ali, Ah Kau and Arumugam would joined the fray. Securities firm would be packed. There will be no parking bay available at securities firms. At this point in time (KLCI=1,100), such situation has not happened yet.
5. I tend to disagree with the statement - "It is the crowd that pay you a big profit in the market". Due to the insignificant amounts that we retailers contribute, it is actually the syndicates, the institutional funds and government funds that pays you the most profits.
As such, our aim as a retailer is to capture the movement of these big players.
currently is the fund that pay u money...
of coz 1100 will not be as important as 1300, but i dun anticipate 1300 for psychological benefit (well, there really exist this probability).
but to reach 1300, 1100 will be an important stepping stone. To serious investors, of coz 1100 not meaning at all from TA and FA point of view (the meaning comes to me only when i expect it create meanings to the usual investing public, as i anticipate the usual investing public are expecting this create motivation to the herd that haven't join the party yet).
see, human attention do change. But that is a process that take time. So the media job is to cultivate this, for a long period of time, from 1000, 1100, 1200, keep on stressing on stock and its performance and future performance.
You also probably need to help media up, consistently show your profit and ppl around you and ppl in forum will get really envy and greed-driven.
Somehow, Robert Kiyosaki and MPH effect also very important. The book, "why we want you to be rich" instill strong confident to newbie that they truly and really going to be rich already...
1300 is definitely the strongest motivation to the herd that like to move en masse, but 1100 will be laying the foundation for the day to come.
any how, very true of what u said is now, most newbie haven't join in the market. I consistently track the securities firm in Penang, Johor and KL --> not so "hot".
I guess they are distracted at current issue on UMNO, US and Iraq issue, and etc. If this is the case for another 1 to 2 month, 1100 will be a damn high point from my point a view.
Hahahaha well said.
Like that ar, okaylah...
ROI per month - 20%
These few months shot up ranging from 30-50% ROI per month.
Enuff promotion ka? :P
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