Galileo and the Stock market

“And yet, it moves”. Galileo Galilei, the famous scientist - astronomer is supposed to have said this, after being forced by the Inquisition to retract his support for the Copernican theory.

This article on What moves Stocks reminded me of the old story.

In the short run, stock prices are volatile, erratic and unpredictable. What moves stocks? Everything.
…….
In a nutshell, short-term stock moves are random…..That why it’s largely a bad idea to try to profit from stocks in the short term. Just as blackjack players might win once, twice, three times or even a hundred times, in the long term, most will lose.

The rest of the article focuses on “value investing” - over the long term. I’m quite sure that a “technical” investor could quote page and verse to refute the above; but as I know nothing about “technical investing”, it still doesn’t serve my purpose.

Been looking at variants of the “Dogs of the Dow” - there’s a similar strategy called “SAPI Slugs” which uses the S&P 500 index instead of the DJI. Might be somewhat better in that it uses a wider basket of stocks, but I haven’t come across any statistics measuring its performance.

Ah well, just have to keep looking.

Written by 2cworth on February 21st, 2006 with no comments.
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