The phrases “short-term overbought” and “oversold” are terms that are applied to the stock market. They are avidly followed by some investors as a means to determine the short-term direction of the stock market. Sometimes they are projected incorrectly to the long-term trend, which can be a huge mistake.
This column has quoted members of the Rothschild family from time to time. Most of us at one time or another has heard of this family. Who were they and what did they do? In short, they were one of the most renowned private families in Europe and one of the greatest Jewish families of modern times. They helped shape nations, empires and industries in the 19th century.
Reputation is an important asset to corporations and those who know it do what they can to build it. To achieve prestige requires a long-term outlook toward building competitive advantage. Companies develop winning reputations by both creating and projecting a set of skills that their constituents recognize and are unique. For some companies, that means differentiating themselves through innovation—nurturing good ideas, translating them into products, and marketing them well.
Market experts often refer to the general market. What is the general market and why is it important? In broad terms the general market is represented by leading market indices like the S&P 500 or the NYSE Common Index (an index of all of the stocks listed on the NYSE).
An old Wall Street adage holds that a stock is worth what somebody is willing to pay for it. However, even more appropriate is an adapation of that adage by Investment Advisor Richard Ney (1916-2004.) He used to say “a stock is worth what the NYSE floor specialist is willing to pay for it.” In any case, both have more merit than all of the blue sky that so-called “investment experts” tell us what a stock or the stock market is worth.
Over last few decades, many investors have moved away from the traditional full service stockbrokerage firms to discount and internet brokerage firms. For some investors, especially during the heady days of the late 1990s and the middle of the first decade of this century they have abandoned all brokerage advice and took on the business of investing by becoming “day traders.”