I was using an example of your flawed math. You are wrong about the probabilities of price recovering from $5 to $10. I don't know why you are even talking about fundamentals as that has nothing to do with the discussion. You need to read the first post and understand what the discussion is about. It's not about portfolios, its not about fundamentals, its about a phenomenon called the traders fallacy.
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OMG I can't believe this fallacy still exists in trading!
- Thread starter wxytrader
- Start date
I was using an example of your flawed math. You are wrong about the probabilities of price recovering from $5 to $10. I don't know why you are even talking about fundamentals as that has nothing to do with the discussion. You need to read the first post and understand what the discussion is about. It's not about portfolios, its not about fundamentals, its about a phenomenon called the traders fallacy.
I was using an example of your flawed math. You are wrong about the probabilities of price recovering from $5 to $10. I don't know why you are even talking about fundamentals as that has nothing to do with the discussion. You need to read the first post and understand what the discussion is about. It's not about portfolios, its not about fundamentals, its about a phenomenon called the traders fallacy.
The S&P lost over 50% in 2008. It took about 5 years to recover.
I didn't say it would NEVER reach its old highs.... there's a factor here called time.
Pull up a 15 chart of Chipotles. Look for the ecoli scare. Big drop. It recovered, and it has been doing pretty well since then. Why? The model works, they add stores, revenues grow, earnings grow. ---> Fundamentals. That's why it went from $41 to $2000
Time is irrelevant here. The point is that the price can return to $10 just as easily as it dropped to $5 with similar external factors as mentioned.
The S&P lost over 50% in 2008. It took about 5 years to recover.
Why did it take 5 years? I am going to have to walk you through this...
Time is irrelevant!!!! ???Time is irrelevant here. The point is that the price can return to $10 just as easily as it dropped to $5 with similar external factors as mentioned.
wtf does that even mean.
Of course time is relevant.
Well then give us a list of 5 stocks from the S&P 500 that have dropped 50% and recovered in a few days.
What are "similar external factors"?with similar external factors as mentioned.
Enough of the bs... give us some real-life examples to prove your point.
By all means... walk me thru it.Why did it take 5 years? I am going to have to walk you through this...
So .... for a $50 stock that was once $100 it will need a lot more of the external forces to return to the prior level than a $1 stock to return to $2.
You're getting close to understanding it. Would you say that a stock that was once a $100 and was now a $50 stock needs a lot more external force to return to $100 than it needed to drop to $50?
(Think of this as in a trading range not so much as a capitulation for simplicity)
By all means... walk me thru it.
If a stock is trading at $10 and was now trading at $5. Mathematically the stock price only dropped by 50% but now needs to increase by 100% to return to $10. Does this mathematical disadvantage come into play as far as the chances of you regaining your loss?
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