Tuesday, January 20, 2009

Excellent Quote

Here is an excellent quote of the day from "The Big Picture" :

Quote of the Day

"Nothing has been a more reliable indicator for an upcoming recession as the price of Oil. Every major bear market, every major economic decline has been preceded by a large spike in oil prices. The 73-74 recession, recession of beginning 80's and the recession of 2000. Oil prices jumped 80% between 1999 and 2000. Oil prices have been the most important indicator of major economic disasters. Whenever Oil prices rise about 80% from year ago levels, a fair chance does exist that a recession/bear market will follow." —Stephen Leeb —Danish Physicist Niels Bohr was known to have a horseshoe prominently displayed above the door frame of his office. Asked what it was for, he replied that it was a good luck charm that helped his physics equations. "But do you believe in that superstition?" he was asked. "Of course not!" the future Nobel winner replied. "But I have been told that it works whether you believe in it or not..."


This is an excellent point of why there are divergences in fundamentals and gives weight to many aspects of Dow Theory. Often, I feel that Dow Theory works to the point of able perception and often that is where it fails. Hence the support for fundamental analysis along with technical analysis. Also, This article points out the the self-fulling behaviors and irrational price movements since in today's markets. Which also confirms a need for sentiment analysis, or may give way to contrarians.

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