As an Analyst, I have done it is the task of my current opinion. I’m looking for far less reasons, to confirm my assessment, but rather, after such moments, which might cause you to falter. Only then, if there are no arguments against my current forecasts, to find or not available in adequate number, I hold on to the previous assessment. This or a similar approach once proposed by Karl Popper.
It really has its charm: in most cases, we find it relatively easy to find arguments for our opinion. We are well trained. But we refuse most of them with devotion, to find arguments that might shake up our view of things. This type of behavior is hardly the objective of the leader and the source of many social and societal problems. But it also is human. It simply costs far more power to find good reasons against your Position than for you. You will find you eventually, you have to admit in most cases a mistake. This is not necessarily motivation.
In the past twelve months I have from my own rather restrained assessment of the stocks markets is no great secret. The Dax showed up well, contrary to the almost unanimous majority opinion, correctly. In the language of my Kids that for me is already a pretty cool thing.
the phenomenon of relative strength
The biggest danger now is, for me, in my scepticism, to see the little Inspiring, and to turn a blind eye for the Good and the Beautiful. In the attempt to avoid these errors, it occurred to me recently, especially the European utilities index. Actually, the Chart of this “Euro Stoxx utilities is” completely unspectacular: Since more than five years, he wafts between about 230 and 300 points more or less directionless. Exciting he is, if we take for comparison such as the Dax. The loss of 18 percent in 2018, a nearly unchanged utility index.
The just need to bring a broad industry chart: While the leading index bid farewell to the South, the providers, on balance, just – nothing. This phenomenon is called “relative strength” and a analysts ‘ attention. Also the Trends of the relative strength usually continue for a long time. On the other hand you will not fail to refer to this supplier Charter and its technical Constitution as “good”. Should he succeed, to overcome the massive resistance zone between 300 and 305 points, would only be a clear positive Outlook with a target of around 350 points, after all, a rise of around 15 percent, instead of imprisonment.
Yes: This Chart is eating away at my skepticism. It may be that the supplier and the Dax to collapse? Even if the are in demand as a defensive perceived utilities traditionally, when the Dax, Euro Stoxx 50 and so on are in a bad mood: The probability that they will rise significantly, while the Rest continues its downward trend, can be located at best at 50 percent. So, as soon as the European utilities index breaks the resistance area between 300 and 305 points, was my search for an Argument that my skepticism is at least partially out of the question, successfully. For this case, I would be powdered with the staple bag, if I would give this development has no influence on my Dax-evaluation.
But Still it is not so far. The ESTX listed providers significantly below its crucial barrier, and yet again, at least a temporary Bounce from this Zone is more likely to occur than any of the alternative scenarios. But if I take my Job seriously, I’m going to have to Eon, RWE & co. necessarily, at least in the back of your head.