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Should You Buy “Falling Knives”
Be prepared for the next great transfer of wealth. Buy physical silver and storable food.
zerohedge.com / by Tyler Durden on 02/13/2016 – 15:02
Long before the saying “BTFD” emerged on Wall Street as a result of some $13 trillion in central bank liquidity injections (now rapidly unwinding as a result of the failure off the Petrodollar and the so-called Quantitative Tightening) which made corrections impossible if not yet illegal, the phenomenon of buying sharply falling stocks had a different name on Wall Street: “catching a falling knife” (alternatively “dash for trash”).
And yet, absent a functioning global central bank does it pay to catch falling knives? That is the topic of the latest analysis by SocGen’s Andrew Laphtorne, whose conclusion is bound to disappoint thousands of 20-year-old hedge fund managers whose only “edge” is to buy whatever is most red on any daily heatmap.
But before we get to the conclusion, a quick look at this fascination with “catching bottoms.” As Lapthorne writes, in the retail industry “there is a whole sphere of psychological research dedicated to exploiting our fondness for a bargain. From overpricing items to begin with, only then to discount them, to placing them next to more expensive assets, to bundling items together to give the impression you are getting more for less. ‘Black Friday sales’ type events are essentially there to exploit our weakness for an apparent bargain, to the extent that the thrill of getting a bargain is emotionally more important than the actual pleasure you derive from the underlying item itself. Steep price declines in equities markets can create such emotions.”
The post Should You Buy “Falling Knives” appeared first on Silver For The People.
Thanks to BrotherJohnF
Source: http://silveristhenew.com/2016/02/13/should-you-buy-falling-knives-2/
