A short story based on my simple interpretation of various characters, feelings and emotions of the market:
<dunno whether appropriate to post in this thread or even appropriate or not to be posted>
But imagine this scenario:
Currently the analysts are rushing to write their story and valuation target for a particular stock. they want to put a "BUY" call eg. Analyst A wanting to put $1.00 BUY target price (please note that the intention is there, sad to say that often valuation is to support the intention). but prices went up and passed $1.00. To make the "BUY" call meaningful, Analyst A put a buy call of $1.25 by tweaking the valuation assumptions (remember that valuation is an art not a science!! )
Analyst A changed and released buy call of $1.25 out to market - share price cheong more (remember that throughout all these, market is on an uptrend). Everyone congrats Analyst A (and their firm) for being spot-on - more trades and brokerage commissions for all.
Analyst B picked up the story and knowing that market price already $1.20 - again to make a BUY call more meaningful, their unique target price is set higher, eg. $1.75. market is bullish and optimistic. Report released to market - market gets wild with hope - buyers buy more as they feel that professional analysts using scientific detailed calculations have a price target set (who on earth reads or questions assumptions??). Buyers buy and prices cheong towards $1.75! Everyone congrats Analyst B (and their firm) for being spot-on - more trades and brokerage commissions for all.
Analysts C, D, E, F to Y. . .. comes into the picture to cover the hot stock. "Initiating Coverage", "Upgrade", "Buy", "Outperform" ... Everyone congrats Analysts C,D,E to Y (and their firm) for being spot-on with their price targets - more trades and brokerage commissions for all.
picture this: the Bulls are stroked and tickled and hardened with desire for greater thrusts (and higher prices!), and the Bulls are tickled and stroked more.
More and more investors jump on, more and more analysts upgrade their reports and price targets... the hardened Bulls are stroked more and more, all worries and cares are abandoned, every Bull just wanting to enjoy themselves, they abandoned all cautions, throw away all protections (eg. cut loss, trailing stops, allocations) and try all sorts of positions (eg. derivatives, options, leverages). The Bulls want to have greater Highs.
BUT until the point of cannot tahan-ness and often reports will write - "The Bull Climazed"... The peak of Europhia is reached (I am sure all of you know how it feels . . . ). But some Bulls are climaz more than once, and the feeling gets higher and higher. But often we will ask - who else will push the market higher...ie. where to find the millions of ammunition to push the feeling Higher??
But an Analyst Z comes along and starts to write on the harm that too many climaxes can do for the Bull and warned that Bull market has reached its Ultimate Climaz, "over-shot", lost its steam, the europhia has over-valued,
slowly but surely the hardness softens, depsite more efforts to stroke the Bull, its to no avail as there's no more ammo... all things back to square one. The Bear takes over (sleep, rest and replendish ammunition in its two production factories)...
Nature is such a wonderful thing and is repeated everywhere, from our daily lives to all things around us (including the market)... many a times, it functions the same way and is repeated over and over again and in many different forms BUT yet the same feeling, same analogy. Thus to be able to control your desires and Bullishness and to know when to rest and when to thrust with the Bull, is an important element to succeed. Do not let the Bull over-rule your head.
PS: I am sure the above story can be elaborated in different analogy as many Bros here are more experienced than me with Bulls and Bears!!
Is the market so simple or am I the simple one??