[DcifrThs]

[ QUOTE ]
Agreed. Now the question is WHY ARE THEY BUYING? To that, there is no predictive answer. That was my comment to Dessert in the sense that he felt that for whatever reason, people would miraculously come to their senses in a couple of years time and realize that this stock is trading significantly underbook, here comes the buying pressure, and Dessert makes a nice profit as the price is driven up to par. My critique of that point is the fallacious assumption that people would realize the stock's undervalued quality (which would have to be based on a clear consensual and mutually agreed market model, which is a wonderfully amazing assumption)and then flock to it. I brought up that point for the purpose of demonstrating that as a TA I don't care why people buy stocks. I only care what the stock action is currently demonstrating. I don't think it is reasonable to assume that everyone would agree on a valuation based on some economic model and then flock there, the price action on the charts show you EXACTLY the valuation that the public assumes.

[/ QUOTE ]

the best way to explain why people start buying is like backwardation. it isn't some magical thing. it may or may not need a catalyst.

in backwardation, as the maturity date approaches, the futures price trades up towards the spot price. "normal backwardation" is a large source of returns from investing in commodity futures.

similarly, as the value becomes more and more visible to the market, the individual security can become more and more attractive to the market as time passes. events, company filings etc. can release more and more info about the value of that company relative to its traded price.

a fundamental analyst looks to what can cause the buying pressure to increase over time. at least this is how i'd think about it.

it isn't soem flippant random act like i think you seem to suggest though. there is logic and well founded study behind it.

as for mandelbrot, just look up any of his freely available papers on MMAR (or MMAP)...multifractal model of asst returns (or asset prices). look at the resulting graphs. post an example here.

post one price chart with any TA analysis you have and then post the MMAR price charts to see the comparison.

easy enough...

Barron