1907

Discussion in 'Psychology' started by nokomisjeff, Sep 17, 2008.

  1. As a student of history, one might look to the market action of the Panic of 1907 to provide insight.
     
  2. Only on the surface. Almost everything is performed differently now. And rarely do 2 major crises unfold in the same way. People are much more knowledgeable, brokers are different, exchanges are different, the derivatives market is much more leveraged, there is now a central bank, technology is completely different, etc. etc. etc...
     
  3. But human nature never changes.
     
  4. Cutten

    Cutten

    Sadly none of us were alive then, so the lessons whilst good and intellectually sound will not really be felt in the gut. One cannot buy the S&P on full margin during a true market meltdown by intellect, it needs balls, market sensitivity, timing, discipline and experience. That can only be learnt by doing, not solely by studying the past IMHO.

    Ultimately there's no shortcut to experience. Saying "study 1907" is excellent advice for a skilled experienced trader, just like saying "duck under the jab and work the left hook" might be good advice to Joe Frazier. But if you give that to your regular bum, it won't make a blind bit of difference and may even get them in trouble by making them think they know what they are doing.
     
  5. The guys who taught me to trade cut their teeth in the wheat pit in the 1920's and 30's. They taught me that many a trading lesson can be learned from a study of history.

    The banking crisis and credit crunch today pales compared to the one in 1907.
     
  6. The underlying factor is always the same...excessive leverage
     
  7. mokwit

    mokwit

    What happens and what is recorded as what happened may not always be the same thing. Think about it, are the newspapers and mainstream media be a good guide to what is happening now as it is happening? Will they be a good guide for those seeking to discover what happened?
     
  8. Cutten

    Cutten

    Well so far we can safely say Paulson is no J P Morgan.
     
  9. Don't look at the news, look at the tape and price action. Every tick from 1907 is archived.
     
  10. Something that should never be done anyway. ;)
     
    #10     Sep 18, 2008