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Old 12-19-2001, 11:23 PM
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Default OK, who here doesn\'t understand the simple concept

Okay, who here doesn't understand the simple concept that, if it weren't for people betting stocks would continue in the direction they're going, stock prices would generally tend to continue in the direction they're going?

In other words, the best indication of "true" demand for a stock is an extrapolation of the immediate trend in demand. Also, the fact that prices are fairly random proves the existence of "investors" who make money without reading a single research report.

So here are two charts:

Lookign at these two-year daily charts of GE and LAB, which one looks over-fished - meaning it tends to reverse - and which one looks trendy - meaning it tends to continue in whatever direction it is going?

Why might a chart of a less liquid instrument look trendier? How badly would a trend trader have gotten chopped up in GE in March of 2000? I only bring this up because it seems people are SO inclined to look just about anywhere - and believe just about any theory - but at the actual demand for a stock!

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