IMVHO, this is a great post. It was originally on TF1, but it fits in so nicely here. See what you think:
To: KG4 who wrote (85) 3/7/2006 6:45:23 AM
From: rrufff Read Replies (1) of 89
No problem - I generally agree with you but just wanted to point out that there are different types of newsletters. The ones that get the attention are the ones that you see a company pay and then they dump shares. This type of PR almost always gives you a lower price on the shares and I urge CEO's to avoid that type of promotion. I was relieved when Creede found out that the NNYG was NOT this type of PR.
One that is independent is different and less likely to have affixed to it a NEW supply of shares, issued by the company.
Now, that's not to say that there isn't going to be a big price rise and then a selloff. It's just common sense. Share price is a function of supply and demand FOR SHARES, nothing else in the strictest sense.
Background and perception and promotion affect demand.
Float is the supply. Issuing new shares increases supply obviously.
I'm admittedly simplifying but that's pretty much it.
So, if a newsletter comes in and says Company X is worth 3x the current price, that may very well cause a spurt in the price per share just as if the CEO announced a new oil discovery. Clearly, the second type of announcement is more likely to lead to a higher sustained price than the first and I think that is what you are saying.
Not to put words in your mouth as you always have a full range of fine things to say.
As Creede says, each of us has to decide how we handle our portfolio and how we treat each stock in it. Some of us are here all day. Others can only check a few minutes a day. Some have a lot of funds in reserve, others can't afford to see a gain turn into a loss.
That's what makes up the universe of investors.
For me, if I have a very large position in a stock, a big gain will create a portfolio that is unbalanced. I take the emotion out of my decisions and reduce that position to something that fits w/i my portfolio's structure. As a result, I often "leave something on the table." Over the years, I've learned not to look back so it doesn't bother me that much, and much less than if I see something tank after a big gain.
All of this is nothing of genius. It's common sense but it comes to the point that successful investing requires the elimination of emotion in my opinion.
In other cases, I may have only been able to buy a relatively small amount of a stock that I believe is a candidate for a "home run." My pinkies and pennies, because of the risk and price often fall into this. This enabled me to have a huge gain on HISC. It wasn't until it hit the teens that it started to overwhelm my portfolio and I was approaching the point that I would lose the 3 or 4 hours of sleep I "normally" get LOL. I rarely thought about HISC when it started as a few thousand dollar buy and it actually moved down and looked quite dead. When it approached the 100 bagger area, I was starting to spend way too much time and emotion thinking about just one company. Thank goodness I stuck by my rules even though the chart looked like the move would never end.
Thanks rrufff.
GodBless-ND
cris |
