Roanoke Times
Copyright (c) 1995, Landmark Communications, Inc.
DATE: THURSDAY, August 26, 1993 TAG: 9308250052
SECTION: EXTRA PAGE: 1 EDITION: METRO
SOURCE: Joel Achenbach
DATELINE: LENGTH: Long
A: Famous anecdote: Someone once asked millionaire J.P. Morgan what the stock market would do in the near future.
"It will fluctuate," Morgan said.
Maybe he said it with a certain flair. In any case it's a famous anecdote in financial circles. Stockbrokers tell that story and are so wracked with mirth they double over and turn red and their false eyeballs pop out. The reason is, Morgan's answer summarizes the market's reflexive, meaningless quivering.
A stock trader might protest that the market goes up and down in a logical manner-say, in response to economic news, or to information about a decline in a company's earnings.
That's rubbish. The market goes up and down in part because that's how traders make money-they buy low and sell high. If the market didn't fluctuate they'd go out of business. They create the market, by bidding prices up and down.
"There's a vested interest on the part of lawyers to have more lawsuits, and there's a vested interest on the part of traders to have more volatility," says Daniel Turov, a prominent investment advisor in Oak Ridge, Tenn.
Yale Hirsch, publisher of Stock Trader's Almanac, says a given stock price will go up and down "independent of anything. It has nothing to do with the company's business."
Smart investors, and many successful stock traders, don't worry about skimming the market on a daily basis. But some traders are on a hair-trigger, because they may be holding 100,000 shares of Microsoft and can make or lose big money if the price goes up or down 12 cents a share.
So let's say the Commerce Department releases some new figure showing a 2.3 percent increase in durable goods orders. The trader doesn't think "Is this good?" The trader thinks, "Will this make the market go up or down?" And so the trader watches the other traders, and everyone stands around with a wet finger in the air.
James W. Gottfurcht, a clinical psychologist who writes about finance, says traders exhibit the classic "fight or flight reaction" that is part of every human being's psychology. The trading pit is a high-stress environment, adrenaline is pumping, decisions must be made on the quick-fight or flight-and in such a state, a person is "easily influenceable," says Gottfurcht.
And in case you had any doubt: Never buy a stock upon reading good news about the company's performance. Because by the time you get the official news, the professionals will have already bid up the price. They know the rule: Buy on the rumor, sell on the news.
Q: Why are some toddlers extremely talkative but totally incomprehensible?
A: You've probably heard some 20-month-old critter say something like this: "Habba nooba seepie woon-com noo za BEAST?" And you instinctively know that this means, "If I don't get to watch `Beauty and the Beast' right now I'm going to start slinging poop."
It is certainly true that children invent words which have meaning to the child but not to the non-diapered population. But that's not what this is. This is jargon babbling.
The kid isn't conveying information, but rather merely mimicking human sounds, including conversational intonations. The child may even presume that most adults are likewise babbling meaninglessly.
"You can think of it as part of the child's first theory of what people are doing with sounds," says Jacqueline Sachs, a psychologist at the University of Connecticut. "There might be a long string of babble syllables and it will end with a nice falling intonation contour at the end. If you were listening across the room you'd think, my gosh, that little baby is already talking, but when you get closer you realize there aren't any words in there."
The Why staff knows plenty of adults who jargon babble. We call them "experts."
The Mailbag:
Jim M. of Washington, D.C., wants us to explain a matter of physics:
"Relativity tells us that if I travel off in a spaceship at close to the speed of light, I may come back to find I have aged only a few minutes while you have aged years. But relativity also says there is no absolute frame of reference, so from my perspective you are moving away from me at close to the speed of light and should age only a few minutes while I age several years. Obviously both can't be true."
Dear Jim: Thank you for not asking us why time dilation occurs. It has something to do with the speed of light, that's all we know.
Here's your problem: The second principle you cite applies only to "inertial frames" moving at constant speed relative to one other. It doesn't apply when one element, in this case the spaceship, is accelerating. Even if the astronaut is able to leave Earth by latching onto a passing high-velocity rocket, thus avoiding any gradual acceleration, at some point out there in space he will have to stop the rocket and come back, a maneuver that requires deceleration and acceleration.
It is easy to detect whether you are the one who is moving or the one who is staying still. The astronaut is plastered by G-forces against his seat, while the person on Earth is swinging in the hammock in the backyard swilling rum drinks (plastered in a different way). Washington Post Writers Group
by CNB