RUMORS, MORE PRECIOUS THAN TRUTH?
June 11th 2008 00:00
Hey, did you know that... the moon is actually triangle?
It is a sad thing, but rumors have a way of assuming legitimacy in the marketplace and, in so doing, they become more precious than the truth.
How can this possibly happen? Simple, it feeds on the ignorance and the gullibility of the investors. If there are enough people who are not familiar with the fundamentals of a certain issue, and you are able to convince them to buy that issue because of some “little known advantages” that would catapult its price to the top of Mt. Everest, sooner or later, the actuation of that issue will show in the radar of those people who depend solely on technical analysis in playing the market and they will start putting their bets on it accordingly.
What would come as a result then is the realization of a self fulfilling prophecy that would lend credence to the story and give that rumor a value more precious than the truth.
Maybe I am still a bit too green in this business to know if it is an accepted routine, albeit illegal, but people actually fan non-existent flames and they always find the usual victims.
People put their bets on rumors. Never mind if what they are buying is pure and unadulterated “hot air” that has no form, shape or value. For as long as they can see price movements, there are those who will not hesitate to buy in.
Looks like a nice little red bag, doesn't it? Hmmm, and something seem to glitter inside...
Admittedly, there are opportunities in this game for a nimble day trader. That is, if he is not too greedy and he doesn’t mind the risks. He can go in, make his small bundle and then, just as quickly, leave! Of course, things are always easier said than done and that is why we are spending time in this topic.
I think I am being fair. Like I said, there’s money to be made there but there’s also the risk. A BIG risk if you ask me. It is the rumor you are buying after all. There are people who would say that rumors always have a basis. “Where there’s smoke, there is fire” they will even tell you. Well, sure, but don’t let your money get seared.
In a very short time and very rare opportunities that I ever get to mingle with traders and brokers, I’ve met a few who are bold enough to admit (in confidence, of course) that some people with a lot of resources are won’t on stirring the market. They will make a “play” on certain issues by driving its price up. Sometimes, the play is aided by some manufactured stories let loose in the “grapevines”.
These are stories that will not be subject to proper (mandatory) disclosures since they are not officially published. This will not go unnoticed however and the bourse’s officials will eventually start asking questions - especially when damage has been done.
But the company whose shares were at play would sometimes just issue a denial pertaining to the most recent dramatic activity of the price of their shares and that would be the end of it – and the end of YOUR capital (as well) if you are not so lucky.
Still, why are there so many people drawn by these rumors? Because there are times, when the rumors turn out to be true, and by the time the veracity of the story is confirmed it is already too late to buy.
To make a quick buck, some brokers advice their clients to: “buy on the rumor and sell on the news.”
But I am not here to tinker with your trading system, that is a matter between you and your broker, or a decision that you have to make on your own.
I’m only here to relay how the market, sometimes, work.
Just don't forget what's inside the empty bag when you are the one left holding it - NOTHING.
Huh, where'd they go...? Well, not all that glitters is...!
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Though, you kinda confused me too about your gender with that name of yours always popping up in "Katyzzz" pages.
I do try to come up with posts for other Orble channels, but I can't commit that they will come out regularly. Day job has a nasty habit of getting in the way. LOL