Who Sells More - Professional Or Amateur?
Stock prices are falling and I heard an analyst say, "those who are selling today are selling because they have to.
" But who is that, the amateur investor or the professional? Amateurs that invest in investment funds may sell their participation - even if they don't have to.
Investment funds have normally a long-term outlook, yet private investors may sell and expect to be able to buy back later on at a more favorable price.
When this is aggregated by many private investors the investment funds is facing an outflow of capital which requires the investment fund manager - the professional - to sell securities.
Amateurs that have misjudged the risk of their portfolio may have to sell in the case where for example their margin grows above the decline of the portfolio.
As the risk appetite is lowered because of this crash it seems logical that professionals have to sell more.
Pension funds have increased their allocation into stocks over the last decades, this vision may be reversed.
But also amateurs may have realized that their real risk-preference was different that they thought.
I wonder however whether that will lead to sales of stock or whether they will "never return to the market" and leave their losses as they are.
Than as nobody has experienced such a crash in his life which is now compared to the one in 1929, both amateurs and professionals have more or less equal information and knowledge to act.
In general, either side must feel insecure.
The professional may base the decision taking process on fundamentals, but these fundamentals are related to the "old" world - to compare this situation with the old versus new-economy.
Technical analysis will not offer much support either these days.
Only statistical information that 7 days decline in a row is an odd chance, so how much more days will follow? One final question is who will lead a reversal? When will the big-sale end? H.
J.
B.
" But who is that, the amateur investor or the professional? Amateurs that invest in investment funds may sell their participation - even if they don't have to.
Investment funds have normally a long-term outlook, yet private investors may sell and expect to be able to buy back later on at a more favorable price.
When this is aggregated by many private investors the investment funds is facing an outflow of capital which requires the investment fund manager - the professional - to sell securities.
Amateurs that have misjudged the risk of their portfolio may have to sell in the case where for example their margin grows above the decline of the portfolio.
As the risk appetite is lowered because of this crash it seems logical that professionals have to sell more.
Pension funds have increased their allocation into stocks over the last decades, this vision may be reversed.
But also amateurs may have realized that their real risk-preference was different that they thought.
I wonder however whether that will lead to sales of stock or whether they will "never return to the market" and leave their losses as they are.
Than as nobody has experienced such a crash in his life which is now compared to the one in 1929, both amateurs and professionals have more or less equal information and knowledge to act.
In general, either side must feel insecure.
The professional may base the decision taking process on fundamentals, but these fundamentals are related to the "old" world - to compare this situation with the old versus new-economy.
Technical analysis will not offer much support either these days.
Only statistical information that 7 days decline in a row is an odd chance, so how much more days will follow? One final question is who will lead a reversal? When will the big-sale end? H.
J.
B.
