A Bourse Diary

Thoughts on stocks, speculation and ... life

Friday, May 19, 2006

The sentiment is ambivalent

How did the recent declines affected the sentiment of the stock investors?

My observations provide an ambivalent picture:

At least in Germany the mass media responded quickly with quite negative reports and statements. All the newspapers and online media give voice to the warning and skeptical analysts. Suddenly all are not that convinced in the sustainability of the stock markets and - yes and - the global financial system.

My personal impression of the German public is though, that the sentiment two weeks or so ago, was very "enforced" optimistic. The overall psychological state of the country (and the investors are not the exception) is relatively dull, but the strong performance "forced" the public to believe, what they can or do not want to believe: things get better. The bourse once again created its own facts.

You should of course consider that the European markets have performed recently and in the last years very strong. In the USA, the stocks didn't get that hot (but also didn't suffer that great much as the European counterparts in the bear market).

Anyway, the latent pessimism was pushed just very temporary aside and now is coming rapidly back. That's good and healthy.

But, I suppose not all positions, which might have been opened in a "just not to miss the opportunity" manner, are closed now. The long term oriented investors will not sell that easy. What for? - interest rates still do not provide an attractive alternative, especially with the inflation-fears background; the dollar is meant to fall further hence many are "locked" to euro alternatives, and the valuations are still - and getting even more - astonishingly favorable.

The rest is trading, often without any deeper sense and highly dependable on technical conditions (which are short term nature). But on the trading side not few are seeing a short term opportunity. They are now cautious, but not scary. Secretly many hope to go again in plus on the recent buys. This wasn't a sell off so far.

But I am not sure, if we need a sell off at all.

If you close your eyes and forget about the charts, stocks are ok. You want them more ok? - well, may be. But don't get too gready. I suppose there are some other gready men outside, who can take them sooner as you think.

Disclaimer - I do not make recommendations to buy or sell securities - I just post my thoughts, trades and opinions. Please read the disclaimer text at the bottom of the site


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Disclaimer: All ideas, opinions, and/or forecasts, expressed or implied herein, are for informational purposes only and are in no way intended to serve as personal investing advice and should not be construed as a recommendation to invest, trade, and/or speculate in the markets. Readers should not make any investment decision without first conducting their own thorough due diligence. Any investments, trades, and/or speculations made in light of the ideas, opinions, and/or forecasts, expressed or implied herein, are committed at your own risk, financial or otherwise. While the information provided is obtained from sources believed to be reliable, its accuracy or completeness cannot be guaranteed.