Retaildaytrader,
You stated ââ¦Once a momo stocks loses its momo then they usually NEVER recover. While the founders of Google run off with billions of dollars its investors sit there and roast. Poor ole Mr. Johnson's retirement fund keeps getting blasted day after day as Google loses more market capitalization. â¦.â
In my 40 years of investing and trading I have seen many âsuperâ traders make the same call about stocks. Though many of their calls were correct in the short term markets, any trader who listened to these gurus in the long term would have discarded some excellent trading stocks. It really depends on what you mean by âlose its momo â¦â If you mean it will be bad for day traders I might agree. But there are other kinds of traders.
When I first started to invest/trade I was in to stocks called the ânifty fiftyâ stocks in the 1960s and 1970s. I still remember hand charting these from my local paper. You can look at them at:
http://en.wikipedia.org/wiki/Nifty_Fifty
But they all didnât die, go into dust and blow away. I still trade swings, position or intermediate term trades in many of these same stocks like American Express, Dow Chemical, Coca-Cola, IBM, McDonalds, Pepsi and Sears. But then there are those that disappeared or were swallowed up like Digital Equipment Corporation or Polaroid.
I believe that managements can make bad decisions in the short term that may shut down their stocks for many quarters. But, in Googleâs case I believe it is far too early too say their game plan will not work in the long run or that they do not have the management team in place to reinvent earnings.
One the other hand what may becoming true for Google some time soon are the volatile trading days where vast sums are made by big moves in the stocks price. Only earnings over several quarters or several years will bear this out. However, I have seen many a trading desk wrong in the past and profited from technical analysis that mocked their statements.
RabbitOne