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Even though you may have sold the stock at 17, having probably missed selling it at 19 less than two weeks before, you haven't bought it back yet so you really don't know if you will come ahead yet. Apparently, you have no idea what this stock is worth and you just follow the crowd in your evaluation of the stock. Short time, I know, the market is often irrational which leads more often than not to big buying opportunities. The stock may start rebounding before you realize that it has bottomed. Since you haven't bought by then, you would be relactant to buy at a higher price than you could have done before. Then, the stock would be above the price you sold it at. A good news comes along, and you would be sitting there wondering why the hell did you play the game like you did. I am trying to say that if you have no idea what the stock is really worth, you end up loosing your money, in the market, in the long run. You are trying to outsmart the big traders by palying momentum their way, but you don't
have access to the same information and technical tools they have. Most famous market achievers did not play the market your way, quite the opposite. I, sometimes, do things your way but with half my position in a stock, keeping the other half fixed as a core investment. For instance, last month, two days before the earnings report for CYBE, I doubled my position at 13. The earnings came better than I was predicting and I sold the half at 16 1/2 hoping to buy it back at 15 which was the resistance point before earnings. The stock kept going up and hit 21 5/8. Today, under market pressure, it is back down to 16, so I could buy back the half I sold but half a point is no justification of what I did, not to mention where I could have sold instead. Besides, I have good reasons to believe that this stock is going to reach 30 before the end of this year. I was saying it would reach 20 in February 97 six months before it did, and the stock was then at 10. To sum it up, I believe that Frank's approach to
investing is much mor sound than yours and remember that to win one battle in not winning the war, and laughs most the one who laugs last. Ghassan. |
