Stock Markets – Herd knows where the market is going and not the charts

In the wake of nauseating stock-market losses one investor friend of mine wrote to me last week questioning the importance and relevance of a slew of economic reports on retail sales, consumer prices, housing and corporate earnings and so on from various agencies periodically and its impact and influence on the stock market movements.

Besides news flows specialized reports and variety of stock charts (daily, hourly monthly and so on) are published to ascertain the direction of the market fluctuations.

In spite of all research reports, charts and in depth analysis- Why then institutions and investors loose tons of money in the market? And become a prey to the wild price fluctuations.

How many investors understand those charts and reports and make the buying and selling decisions is a billion dollar enigma. In most of the time a sell recommendation turns out to be buy ones and vice versa with in 24 hours of trading or investing why?

Will those reports and charts really send stocks soaring or back into the trenches?

So far, no knowable answer to any stock market wizards. One knows surely the fact that the charts imprison the past data which is of no relevance for the future.

The funny part of it is that both the buyers and sellers read the same report and react wildly.

The reason why those wild gyrations of the world’s benchmark stock index and stocks are so hard to believe because it does not work on any logic or rational.

Anybody searching for cause-and-effect logic in the daily gyrations of the market will be disappointed.

Because the market has become a case study in the psychology of crowds, many experts say.

One should read the October 7 ,2008 New York Times article titled, “Forget Logic; Fear Appears to Have Edge” before investing.