Saturday, February 21, 2009

Investor's Sentiment Part 1

First of all, when people talk about investor sentiment, or market sentiment, they are referring to the aggregate attitude in the investment community. Essentially, investor sentiment is an approximate measurement of the stock market's attitude at a given time - it could be overly bullish, bearish, or somewhere in the middle. This type of analysis would usually be employed by a short-term trader or technical analyst trying to reap profits from short-term movements in stock prices.
In the analysis of securities to trade,the most important thing to consider after considering other things is the investor's sentiments.No matter how sound your analysis is both fundamentally and technically if you refuse to consider what investors are doing then you might be in for a goof,for instance my analysis of first inland and flour mills was faulty due to partial lack of investor's sentiment on these stocks but i have rectified that.
Infact it has being found that traders who had a background in psychology are better traders because they can study human behaviors to trading(investor's sentiment inclusive).
How to decipher investor's sentiment
Knowing investor's sentiment requires skill and research,in my own opinion every sentiment is based on either experience or information,for instance the financial statement is an information that determines bias,the charts are also pictorial information that investor's can use to determine their bias(whether to be long or short).
In part 2 I will discuss how technicals and fundamentals reveal investor's sentiment.

Update

I will like to apologize for not updating this blog,I have got many thing on my hands and alot of research has also being going on to fine-tune my analysis.
The first inland trade and flour mills trade was a technical goof,the only advantage is we can turn it to long term.
I will try my best to always update the blog as at when due,thank you