STREET DOGS: Now what next?
Markets are forward looking – and always have been
From ‘The Psychology of the Stock Market’ by GC Selden, originally published in 1912: It is axiomatic that inexperienced traders and investors, and indeed a majority of the more experienced as well, are continually trying to speculate on past events. Suppose, for example, railroad earnings as published are showing constant large increases in net. The novice reasons, "Increased earnings mean increased amounts applicable to the payment of dividends. Prices should rise. I will buy." Not at all. He should say, "Prices have risen to the extent represented by these increased earnings, unless this effect has been counterbalanced by other considerations. Now what next?" It is a sort of automatic assumption of the human mind that present conditions will continue, and our whole scheme of life is necessarily based to a great degree on this assumption. When the price of wheat is high farmers increase their acreage because wheat-growing pays better; when it is low they plant less. I remember tal...
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