the aussie stockmarket continues to be dominated by the US scene today, and it’s just amazing to me how the markets work. i laugh at people who like to analyze things, and check company backgrounds and data, etc. frankly, asides from filtering out the odd company with big fundamental business problems, generally this sort of analysis is a waste of time, it seems to me. the stockmarkets are almost entirely driven by emotion – there is little logic to it, and anyone who approaches it from a purely analytical or rational point of view is going to get toasted.
today, for example, is an excellent illustration. leighton (LEI) is a company i have a bit of knowledge about, and in spite of this company being rock solid, making great profits, winning new and huge construction projects, etc., it plunged 6.1% today, largely due to the large fall on the US market which pushed our whole market down. by EVERY statistical and data-driven measure, there is no way leighton should be going down in value by that much, but it did, and largely because of the emotionally charged atmosphere of the current market situation led by the US.
i love hearing the economists and market analysts being interviewed on TV and radio, because they give these highly rational spiels about what happened and why, when it is plain that none of this is logical or predictable – it’s the reason why we have so many “experts” in this field… lots of people with well-researched opinions, but none of which can really explain why most of what happens actually happened. it’s a big crystal ball game, and unless you factor in the emotional angle by at least 80-90%, you don’t really understand how the markets work.