THOUGHT FOR TUESDAY 22ND JANUARY 2008
From top share author MALCOLM STACEY
Hello Crazy Cats,
Ouch! That was a nasty drop.
And what caused it? - hardly anything. No terrorist action (thank goodness), no profit warning by a giant, no huge fraud?
It was fear in Asian and India of a recession in the USA. Well, everyone has been worried about a possible recession in America for many months now. So why the sudden lurch?
Especially when the fall came on a day when the Government announced they were saving Northern Rock (NRK). That should have cheered sentiment everywhere.
Well, you have to understand the primary motives in Crazyland, gang. They are fear and greed. Greed usually wins out, but when it doesn't fear gathers speed faster.
Fearing that the shares may become worth even less as the session went on, caused fast selling. And you have to understand that greed was the prime motive for the fall in share values - not a fundamental cause or a piece of particular nasty economic news.
We cannot do anything about this sort of thing. But by way of consolation, I find that every time fear causes a big movement down, it is usually superceded by the other negative emotion - greed. And so there could be a recovery spread over the rest of the week.
I could be wrong. I am an optimist. I did not sell loads of shares during the fall. If I had done, I could have bought loads more shares back for the same money. I am kicking myself. I often do. But then the fall could have reversed, leaving me out of pocket.
There is still time for the reverse to come. There always is. I might not lose as much this week as I thought. Rocking on!
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