Romanian Sentiment Review - The Rational Extreme

George Soros has been recently quoted saying that “Buying at the start of a bubble is rational”. This is an open ended statement. It does not define a bubble, the degree of the bubble, the potential appreciation on Gold and of course the time George Soros might want to hold Gold. George Soros might have said many things along with this quote, but as information gets discounted over the internet, what is left is the bubble and rationality. Without the kind of preparation and knowledge George might have, a lay investor may draw his conclusions from what the guru implies. It’s all a Chinese whisper. You really need to research on Gold view to understand what he really means.

Assuming George message was summarized by the quote, what he is suggesting is that buying in extreme is rationality as the extreme is bound to get larger. If you don’t place it in context, the statement looks oxymoronic. It means a rational extreme. Extremes are never rational and buying at extremes need preparation and knowledge. Extremes by very nature are overstretched and irrational. Now if we look at Romanian markets, its not just RSR readings but classic conventional momentum that suggest extremes. Internet bloggers have already started getting vocal proving how wrong the experts are. Volatility indicators that are traditionally known to gauge fear are at all time lows across global equity regions. This all proves that we are living the time of rational extremes. Mar 2009 and Oct 2008 when we mentioned about reversal and potential buying opportunities, the majority was rationalizing negativity. Now the market participants are rationalizing positivity.

Our best wishes are with the majority. What we see is a non confirming extreme on Advance Decline, Yale Hirsch negative cycle seasonality and all time extreme bullish readings on RSR across indices and time frames. Of the experts are not the bullish. But who cares about experts anyway? What does an expert know? The Confidence index at all-time max (40). We continue to look at a topping market despite market’s inability to reverse in March.

Enjoy the latest Romanian Sentiment Review.

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A Sentiment Index reading can assist to measure these extremities in mood and potential market turns. Survey respondents will not only benefit from the interpretation and indicator readings but also will be invited for regular training seminars on sentiment indicators and provided relevant literature. Orpheus Capitals and Prognosis.ro are two independent research companies publishing the Romanian Sentiment Review. RSR is a sentiment index based on the survey of market players. The respondents are queried on a host of areas including time frame of expectations, bullish and bearish bias and sectoral preferences. The data is then analysed to create various sentiment indices. The readings of the various indices explains the market sentiment and market direction. We also furnish the sentiment data on a periodical basis to financial institutions, fund managers and brokers for further research and investment.

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