Why Do People Buy At A Top?

trader198 · Oct 30, 2013

I made 2fold gains on 177 puts. thanks FOMC.

interesting? no. it is fun to see people lose money in this BUY TOP and sell bottom game.

make money is easy in trading
too easy, just less than half hours, my account is doubled again!

since lots of people are just world class level naive SUCKERS!

what I cay say, they are suckers, how can they make money?

Quote from Ciao:

Interesting . what are you basing that? What type of trader are you?

I am a scalper and the high is what interest me, I am neither a greedy nor a ânon-sense4� trader
At least I donât think so lol

but if you talk to trade long swing etc..... then I might agree not to trade the top.....

the other day I posted this;

(Today with OXBT at the top +/-$2 there was another 30 ticks to make)

IMO isn't how one trade but how many $$$$$ came out at the end

pfranz · Oct 30, 2013

Quote from Visaria:
Dunno, lets say it's not and the tax rate is 25%. Then the yield becomes 3%

Still not convinced.
Are firms which failed taken into account?Are firms with no dividend taken into account? Is the tradingjournals' survivor bias taken into account?
How is average computed? Note that dividend yield is expressed as a percentage of the stock price at that time, not of the price as if it were perfectly parabolic (as it would be if annual return were always the same).

So I doubt we can simply take the yield percentage and sum it to the average growth ratio.

NoDoji · Oct 30, 2013

Quote from trader198:

since lots of people are just world class level naive SUCKERS!

what I cay say, they are suckers, how can they make money?

Hmm, looks like those suckers who bought the last new S&P top on the 17th had pure no-heat upside into today's FOMC.

Ciao · Oct 30, 2013

Quote from trader198:

since lots of people are just world class level naive SUCKERS!

what I cay say, they are suckers, how can they make money?

fanny how suckers recognise each other

take a look at OXBT what a lovely sucker

never mind better luck next time

tradingjournals · Oct 31, 2013

My models are viewing Nasdaq100 at 3400 today as a top. Thursdays can be bad days for bulls, and Tomorrow is a Thursday. I am very surprised that VXX did not move as I think it would/should today. Is it that the demand for premium is not firm or that there is enough supply?

pfranz · Oct 31, 2013

Quote from Visaria:
Dunno, lets say it's not and the tax rate is 25%. Then the yield becomes 3%

To get a better idea, I took the values of SP500 Total Return at http://ycharts.com/indices/^SPXTR:

Current SPTR:3150
SPTR on Jun 1988:271 - return on last 25 years=10,3%
SPTR on Jan 1999:1670 - return on last 14 years=4,6%

For the standard index:
Current SP:1763
SP on Jun 1988:271 - return on last 25 years=7,8%
SP on Jan 1999:1128 - return on last 14 years=2,6%

So average dividend yield was 2% on last 14 years and 2.5% on last 25 years.
Still not sure about taxation for normal people and survivor bias influence.
Note also that SP500 has good dividend yield (NASDAQ has a lower one,for example).
After these considerations, I think that my assumption of an average of 1.5% for stocks in general can be quite good.

tradingjournals · Oct 31, 2013

Quote from NoDoji:

Hasn't offered another chance to get long there in a while.

If it does as I think it would, you should be able to get your order filled at 82.48 or even below as early as tomorrow. But I would be surprised if you bought.

tradingjournals · Oct 31, 2013

Quote from pfranz:

To get a better idea, I took the values of SP500 Total Return at http://ycharts.com/indices/^SPXTR:

Current SPTR:3150
SPTR on Jun 1988:271 - return on last 25 years=10,3%
SPTR on Jan 1999:1670 - return on last 14 years=4,6%

For the standard index:
Current SP:1763
SP on Jun 1988:271 - return on last 25 years=7,8%
SP on Jan 1999:1128 - return on last 14 years=2,6%

So average dividend yield was 2% on last 14 years and 2.5% on last 25 years.
Still not sure about taxation for normal people and survivor bias influence.
Note also that SP500 has good dividend yield (NASDAQ has a lower one,for example).
After these considerations, I think that my assumption of an average of 1.5% for stocks in general can be quite good.

Assume one uses all stocks (including the dead stocks). Since the price is limited to the downside by zero, there should be more stocks below the arithmetic average. By the nature of an index such as the dow, the stocks in it are above the median. The geometric average for all stocks could be lower than the geometric average of a major index.

failed_trad3r · Oct 31, 2013

Quote from tradingjournals:

My models are viewing Nasdaq100 at 3400 today as a top. Thursdays can be bad days for bulls, and Tomorrow is a Thursday. I am very surprised that VXX did not move as I think it would/should today. Is it that the demand for premium is not firm or that there is enough supply?

My model isn't indicating a top, but a bottom.

Ash1972 · Oct 31, 2013

Quote from failed_trad3r:

My model isn't indicating a top, but a bottom.

It's indicating <i>your</i> bottom