LONG TERM OPINIONS AND DAY TRADERS

LONG TERM OPINIONS AND DAY TRADERS

On Wednesday, April 18, day traders (as well as most financial analysts) were shocked when the Fed announced a half-a-point reduction in the prime rate. Even the most knowledgeable traders were hoping for such an announcement at the next Fed meeting, May 15. The move sent the NYSE up some 399 points, but frustrated some day traders who were counting on long-term slow growth, and in some cases (especially in dot-com and tech stocks on the NASDAQ) were selling short. “Given the troubled technology sector’s drag on the economy, the Federal Reserve Board’s rate cut Wednesday seemed to be targeted squarely at Silicon Valley” (Piller C-1). Those day traders who bet on a continuing slide of tech stocks were now jolted. Now there would be an even greater divide between growth and value stocks:

“The decision maker will make decisions consistent with his values, which are those things that are important to him, especially those that are relevant to this decision. A common value is economic, according to which the decision maker will attempt to increase his wealth” (Spradlin 1).

Now, the day traders have some research to do. Will this surge continue? Should they be getting rid of the “value” or even long-term “growth stocks, in favor of cashing on the sudden spurt in the market? Should they also take a closer long-term look at Amazon.com, whose stock rose some 38% when the firm announced its losses for the quarter would be less than expected.

Let’s examine some sectors where long-term opinions may now be shifting:

The Defense industry. Will the failure of the Osprey in the Marine Corps, the spy plane incident in the Pacific, and increased violence in the Middle East now increase defense spending? Perhaps such a long-range opinion will not survive, leaving the day trader at the mercy of continual violence in the world.

The pharmaceutical industry. AIDS in Africa has been forcing Merck and Abb



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