Investor Education: 52 Week High and Low
52-week high and 52-week low are commonly used terms in stock market analysis and refer to the highest and lowest prices that a stock has traded at in the past 52 weeks. The 52 weeks is used as a benchmark to gauge the performance of a stock over a one-year time frame.
Read our overview of 52 Week High and 52 Week Low.
Changing Psychology
“If you totally divorce economics from psychology, you’ve gone a long way toward divorcing it from reality.” —Charlie Munger
“The discipline which is most important in investing is not accounting or economics, but psychology.” —Howard Marks
Volatility continued in the stock market last week. The Fed raised rates by a quarter-percentage-point, as expected. UBS acquired, or was forced to acquire, Credit Suisse. And the week ended on worries that Deutsche Bank might be the next big European bank to have problems, even though its capital ratios seem to be in much better shape on paper. When the closing bell rang on Friday, the S&P 500 was up 1.4% on the week, and the Nasdaq gained 1.6%.
If nothing else, the last couple of weeks has shown us how quickly investor psychology can change markets. Banks that seemed fine suddenly weren’t fine. Safe, government bonds suddenly weren’t safe if those assets didn’t closely match one’s liabilities. And rumors, those pesky rumors, can cause chaos.
Highly-valued assets—supported by low interest rates or excessive fiscal and monetary policy—can become significantly less highly-valued, in a hurry, when that support reverses course. 2022 was a prime case in point.
And when psychology changes, opportunity arises for the patient and the prepared. Exaggeration and extrapolation in some areas of the market lead to good value and potential profit in other areas.
“Evidently the processes by which the securities market arrives at its appraisals are frequently illogical and erroneous. These processes, as we pointed out in our first chapter, are not automatic or mechanical but psychological, for they go on in the minds of people who buy or sell. The mistakes of the market are thus the mistakes of groups or masses of individuals. Most of them can be traced to one or more of three basic causes: exaggeration, oversimplification or neglect.” —Benjamin Graham & David Dodd (“Security Analysis”)
Tweets of the Week
In Case You Missed it…
Investing Prudently In Perilous Times w/ Guy Spier (RWH023)
All Together Now - by Morgan Housel
Founders Podcast: #295 I had dinner with Charlie Munger
Value Hive Podcast: Harris Kupperman: Journey Energy $JOY, Patience, and Inflection Investing
Dan Zwirn - Unconstrained Opportunities
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