It usually can be summed up into the Fear of Missing out.
Why do folks only get behind stocks after they have made big runs?
- Thread starter retaildaytrader
- Start date
It usually can be summed up into the Fear of Missing out.
Complacency and "group think" is what drives market behavior. The overall best buying opportunity is always when you can "buy from fear and sell to greed."
The SPX has rallied almost 20% in the three months from September 1st, however it also DROPPED almost 40% in the three months of September 1st to end of November 2008.
Short term memory has the investors complacent, yet they will get burned again, just as they have in the past. Of course, they won't sell until the fear is at its peak. The cycle shall continue.
Of course, traders who watch the ticks should know better, and switch direction when the market reveals the change of trend.
Here is the thing about your statement. You are acting as if this is a long-term trading or investing board, but in fact the majority of folks here hold their positions less then a week or less then a day. Few here, if any, hold their trades past a month.
So if I made a call a year ago about shorting Apple at 193 and now its at 315 then how was I wrong? You see my handle as "retaildaytrader" and then you look at the other posts which indicate the trading done here is short in time frame. So I think you are missing something or maybe English is not your first language and you can't understand what we are trying to tell you.
The problem is that there is only so much time in a day and its difficult to get back on here to update short trades. Also, who am I updating trades for? For people I dont know, never met and will probably never meet? That is useless.
I do know there are folks on here and out there in the blogosphere that make their income from donations and sometimes attract outside money to manage. So they are very careful about updating trades and what they put out there on the board. They also comb the internet making sure no one is mentioning their alias in a false light. Those are the scam artists you should be after and not myself who is not seeking one dime from anyone.
So if I made a call a year ago about shorting Apple at 193 and now its at 315 then how was I wrong? You see my handle as "retaildaytrader" and then you look at the other posts which indicate the trading done here is short in time frame. So I think you are missing something or maybe English is not your first language and you can't understand what we are trying to tell you.
The problem is that there is only so much time in a day and its difficult to get back on here to update short trades. Also, who am I updating trades for? For people I dont know, never met and will probably never meet? That is useless.
I do know there are folks on here and out there in the blogosphere that make their income from donations and sometimes attract outside money to manage. So they are very careful about updating trades and what they put out there on the board. They also comb the internet making sure no one is mentioning their alias in a false light. Those are the scam artists you should be after and not myself who is not seeking one dime from anyone.
Quote from GG1972:
Not everyone can make phenomenol calls like you-Being short AAPL @193 and since that day even though market has dipped nciely a couple of times AAPL has never seen 293Its almost like you are the perfect contrarian indicator made- now to only replicate you
You are OVERSIMPLIFYING this. Fact is stocks that make 52 week highs or 52 week lows will more often then not continue trending well past that point. So one excellent trade is to locate a strong stock with fundamental reasons to go up that is at or close to its 52 week high. Catch that train and ride it.
Of course, there are stocks that are overbought or simply up on speculation that also break 52 week highs. They are not recommended buys unless you have a trailing stop and a short term horizon.
The worst investments I have found are stocks that are falling in value and look on the surface to be bargains because they have fallen. Many new investors fall for this trap, including myself when I was younger. There is often a real reason why these stocks are selling off.
Another common mistake is to counter trend without confirmation of a break from trend and/ or a legitimate reason to sell off. Your short of AAPL for example fits this category. You were either WAY too early or off base. There are much better targets for shorting activity ( e.g. look for unprofitable companies or those with ridiculous P/E ratios breaking trendlines ).
This also works in reverse. Many investors let fear prevent them from participating in most of the bull market of 2009 ( one of the best investing opportunities of our lifetime ). Certainly many were cleaned out somewhat before so this fear is understandable. Others simply could not afford to participate.
The most recent bull move is less spectacular but somewhat similar. This board was littered with bearish sentiment during the majority of the move. At this point, we are at a key point again, a consolidating phase prior to the next move. Given that bull markets usually last around 4 years, there is a strong chance of continued bullish action into the new year. Will there be a pullback prior ? I'm guessing no now ( as opposed to the feeling I had a few weeks ago ). The US economy is picking up and in the end I think this is far more important then Europe's issues. A recovery seems to be taking hold; certainly there are some massive headaches left over from 2008. But markets look forward so if a recovery has started ( and recent economic indicators all suggest yes ) the market will go up.
Big money can only be made by ignoring the crowd. The crowd is afraid the markets are fully valued. The 1225 level is feared. But if that level breaks well watch the move after. Weaker mutual fund managers will be in a panic chasing performance, shorts will be covering in a panic, and people will be recognizing that the recent massive earnings of some companies are worth paying attention too ( eg RIMM at a P/E of 8 was a bargain no matter what US analysts said ).
I'm not saying this scenario will definately happen. Events like Korea can definately stall the bull. Markets can fluctuate, timing can be random. But it may happen and there's good money to be had if it does.
Well, Cramer has a 50% win ratio, and its not like he holds his winners longer than his losers.
Also, most analysts come out with their ratings after an earnings report and after a big move happened. If the news was bad, and the stock fell, then they lower their ratings. If the news was good, and the stock rose, they increase their ratings. They just assume since earnings were good assuming the company does not comment negatively about future earnings, that they will be good as well. There are trends in the market, so you can then have these stocks go up higher on good news and go down lower on bad news.
Trends work because you have investors who refuse to sell at a loss and will sometimes ride a stock down to $ 0/sh like in SUF even though news came out that the company will be delisted and that a revenue contract fell through. As price continues to go lower, these investors finally sell as hope is lost whereas the smarter ones sold quickly at much higher prices.
You then need to decide, do you want to trade these stocks and ride them for a few points up or down, or do you want to find companies that will go up 500% and hold these companies for a few years.
I do both. I traded CL for 7 min last night on a short trade with trend. I thought it might be making a double bottom, got out with a scalping profit. While smart enough to keep the profit, was not yet smart enough to also then set a limit long, since it actually was a double bottom, and CL went up.
On the other hand, I own stocks like SNT which is near its bottom under $ .30/sh, but with positive drug trial news, it should go back up to its high of $ 4/sh, and I will hopefully be able to hold till it does even if it takes a year.
Also, most analysts come out with their ratings after an earnings report and after a big move happened. If the news was bad, and the stock fell, then they lower their ratings. If the news was good, and the stock rose, they increase their ratings. They just assume since earnings were good assuming the company does not comment negatively about future earnings, that they will be good as well. There are trends in the market, so you can then have these stocks go up higher on good news and go down lower on bad news.
Trends work because you have investors who refuse to sell at a loss and will sometimes ride a stock down to $ 0/sh like in SUF even though news came out that the company will be delisted and that a revenue contract fell through. As price continues to go lower, these investors finally sell as hope is lost whereas the smarter ones sold quickly at much higher prices.
You then need to decide, do you want to trade these stocks and ride them for a few points up or down, or do you want to find companies that will go up 500% and hold these companies for a few years.
I do both. I traded CL for 7 min last night on a short trade with trend. I thought it might be making a double bottom, got out with a scalping profit. While smart enough to keep the profit, was not yet smart enough to also then set a limit long, since it actually was a double bottom, and CL went up.
On the other hand, I own stocks like SNT which is near its bottom under $ .30/sh, but with positive drug trial news, it should go back up to its high of $ 4/sh, and I will hopefully be able to hold till it does even if it takes a year.