Trading Journal - July
- Thread starter Seanote
- Start date
If you have a "feeling" and that is the only justification you have to take EBAY short then stay away from it. You need facts: technical analysis, earnings, fundamentals, instituional sector rotation, ect. When I first began trading I always used gut feelings and that's how I eventually blew up my account. IMO I wouldn't fight EBAY's strength. Now, if you're looking for .50-1.50 swing then that's another story. Your feeling that EBAY is overpriced can't be based on much in this current market. Overpriced compared to what? My point is, it's easy to be persuaded by a stock or the market in generally when you really want to trade a particular stock or index. Once you're able to separate that mentality from the reality of today's market, you'll have a better perspective on trading and make more profitable decisions.
Example: Many newsletters state, "XYZ is oversold, great buying opportunity." That may be true but look how many stocks have been oversold and continue to be oversold over the last year. They're creating a false reality that an average trader interprets as a great buying opportunity which is why investors are still long AMAT @ 25. I won't mention any names though.......
I think Ebay is a tough short. Unless some accounting scandal surfaces, Ebay looks more like THE core long in the whole internet sector. Shorting off valuation concerns is a difficult proposition. Valuation typically becomes a shortable proposition when companies are missing estimates or lowering guidance. Not the case with Ebay.
As Seanote said, Ebay has shown impressive relative strength while the rest of Nasdaq has been getting blasted. I think there are solid reasons for this. Ebay has become a category killer, just as great winners like HD, WMT, MSFT and CSCO were. It is very scalable and can work in any country. It will eventually kill classified advertising in newspapers. It has the potential to attract huge advertising rev's, even as other internet portals such as Yahoo and AOL are lsoing advertising rev's.
As Seanote said, Ebay has shown impressive relative strength while the rest of Nasdaq has been getting blasted. I think there are solid reasons for this. Ebay has become a category killer, just as great winners like HD, WMT, MSFT and CSCO were. It is very scalable and can work in any country. It will eventually kill classified advertising in newspapers. It has the potential to attract huge advertising rev's, even as other internet portals such as Yahoo and AOL are lsoing advertising rev's.
Firstly let me say I think EBAY is a good company. Now what bothers me is if you look at what is going on. For the most part they have two kinds of buyers , the uneducated buyer and the educated buyer. Now I am using "educated' in the sense that this buyer is knowledgeable about the product he or she is bidding on. EBAY is fine if you're bidding on a totally quantifiable object but if you're bidding on say an art object or antiquity then you MUST HANDLE AND INSPECT the item. It is impossible to value this kind of item from a photo, although an expert can age something somewhat just by observing the DRAWING. They sell a lot of used cars. Who would bid on a used car without a proper inspection or without driving it. Now people say oh well it comes with a certificate but people in the know always answer "make sure it's on SOFT paper. Millions of people are bidding on stuff which is totally misrepresented and eventually these dumb buyers are going to stop. EBAY tried to harness the antique and art market thru Butterfields which turned out to be a flop. Butterfields was too regional but the plan was vacuous. The have started working now with Sothebys and I believe they will eventually buy them out. The brains behind EBAY are somewhat thinking like AOL, they have to grab an established name before the thrust weakens. In an established educated market like Sotherby buyers have to inspect items and they want to bid on in person on good things. So what I'm trying to say wrongly or rightly the writings on the wall for EBAY. It's fine for buying identical items, known quantities but not if you don't want to be taken to the cleaners by unscrupulous sellers. No one verifies the goods for sale.
