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Any opinions, views, news, research, analyses, prices or other information contained on this website is provided as general market commentary and are not intended to constitute investment advice. The Wall Street Challenger will not accept liability for any loss or damage, including without limitation to, any loss of profit, which may arise directly or indirectly from use of or reliance on such information.
The art of investing has changed significantly in the last couple of years when trading on fundamentals is a reminiscence of the past. Since diversified investment institutions are allowed to "game" the system, the common sense trading on economic fundamentals becomes gambling. The long investor now needs to have the knowledge of a trader.
According to market theory, markets behave rationally and the given price of an asset in a free market is based on all public market information. This is only part of the story. I have a different view of financial markets and observe that they do not move rationally some, or indeed all, of the time. The missing element is psychology and human behavior. The history of financial markets is characterized by a series of bubbles in asset prices which are driven by a massive herd of investors who follow the latest “new thing”.
There is substantial capital chasing returns on assets and this “hot money” moves fairly rapidly from one asset class to another. When the spotlight falls on an asset class that is undervalued, or is perceived as undervalued, the prices of these assets inflate, usually to levels far in excess of their fair value, as more money piles in.
It seems to me that the trick to making money is recognizing these assets before the herd and investing before the values become too inflated. Having jumped on the wave you can either actively trade in and out of the asset taking profit/hedging the downside on a daily, hourly, minute by minute basis or simply take a long position and cash out at a pre-
The major news corporations also benefit from the market volatility. Their goal is to create news (more precisely confusion). As a result you become addicted to their stories
President and Founder
Gigel Marinescu is the President and Founder and contributing columnist for the independent online financial analysis and research, The Wall Street Challenger.
Mr. Marinescu earned a M.S in Aerospace at Polytechnic Institute of Bucharest, Aircraft Engineering School. Mr. Marinescu is continuing doctorate research work applying System Engineering to define Consequences of Macroeconomics Dynamics in Creating Market Imperfections. Mr. Marinescu currently is pursuing a Ph.D. in System Engineering at the POLITECHNICA University of Bucharest, Faculty of Engineering and Management of Technological Systems.
Gigel Marinescu esteemed career includes 14 years of system of systems analyses. Mr. Marinescu possesses a broad experience in system engineering that includes complex system architecture definitions, trade studies, functional architecture characterization, and systems performance analysis. Mr. Marinescu developed the Time Diversity with Packet Combine (TDPC) algorithm that improves the bit error rate of a satellite link. Mr. Marinescu authored or co-
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The art of investing has changed