. . . . On Hunting Speculatives. . . . .
Let's be sure to keep things in perspective. The reason that B2Bs popped earlier in the month. . .was not because the world suddenly had an appreciation for B2B companies and needed to have them in their portfolios at any cost. Huh, uh. . .
What happened was that fund managers realized that these were the internet stocks of 2000 and began taking positions in them when the markets turned around the latter half of October. This began to drive their prices up quickly, when they all jumped in at once.
Fine. . .that should ordinarily be enough accumulation to make modest gains for some time to come, as they must continue to increase their positions as they gain new clients. . or move on.
But this is no ordinary month. It is November. My favorite trading month. . . .when speculators come out of the woodwork to bid up stocks from .125 to $10.00. In November, you come home from work, turn on the news and hear about how much higher the stock market is again and again and again. . .and you end up calling a broker or fund manager and throwing some money at them. . .because you don't want to miss this bull run.
You know it. Think about the friends and relatives that have called you this month asking about investments. Did any of them call through the entire summer? No, because the markets were in their doldrums.
But on top of the influx of investors, we have more speculators, too. And that helps to build the confidence of the speculators that never left. So when speculative traders began seeing broadbands like JDSU getting bid up, they pounced on it. [Notice that after that big runup late in October, it has just sort of sat there.] Then speculators discovered that several of the stocks being bid up were B2B related.
And the search began. . . find a promising B2B stock, preferably with a low float, and start bidding it up, sell the gap, buy the dip and buy the breakout. Well, here we are with our B2B group. . .wondering where all the investors went. The investors never left. Only the speculators did.
And this week, the speculators are in China. Well, China stocks anyway. And I think the China thing still has some legs, at least until a new sector comes along to rock the boat. And keep in mind that these daytraders and swing traders are very very very quick to realize their gains. And with each sell-off, some of them move on to another issue.
So never be the one left holding the bag. . .it is merely a "greater fool" theory, where one fool sells his shares to a greater fool, who sells his shares to a greater one. . .until a 10 cent stock is suddenly 8 dollars, and this house of cards can just as quickly collapse, leaving the greatest fool holding the bag.
So anyone buying a 10 cent stock at 3 bucks, thinking they are making a great long term investment in a foreign country is only fooling themselves. Everyone here knows better by now. . . don't they? You are better off just taking the money and sending it to a non-profit organization that you have never heard of before, so you can make the payments on the directors Mercedes. It's all the same.
Bottom line: If you insist on speculating, then you had better be a great momentum/swing trader or a well-disciplined scalper. Because if you are not, you will be eaten for breakfast.
So what about those B2Bs? They will be fine. They were not merely a speculation. Remember, the base was established BEFORE the speculators 'discovered' them. The fund managers and large investors will wait for prices to come back to earth before resuming their accumulation. But resume they will.
November Mania. China was a SECTOR bubble within a speculative bubble that resides in a high-tech bubble [generally] that all dwell in a kevlar market bubble. Expect more speculation. Expect it to come from left field. Expect it to hit hard and fast. Like OLBs and E-commerce last November. SIEB from 11 to 70. BAMM from 2.75 to 45.
Remember November?
So the question here is what are we to do? Well the less-experienced need to sit on their hands and watch. But those with swift hands and plenty of battle scars can begin making a list of POSSIBLE speculative plays that could come over the next 3 weeks. This is important, because the only ones that are not fools in the greater fool theory, which drives the speculative market, are those that bought in first.
I have said dozens of times since day one on this board. Our goal is to always be there first. Thats why we bought PLCOP near .60 [.375 for me], when other are scrambling for it over $3! Thats why we bought TUNE from $2.75 to $10.00, when others "discovered" it at $13 and bid it to $70. That's why we took heavy positions in XYBR at $1.37, and took some profits near $6.00 just last week. [NOTE: We don't 'pump' our stocks after they have begun to take off. . .this is why I caution those asking about such issues after they have runup. . .saying 'you were late to the party' . . wait for the next one.]
This is the way we play, here at HOME. We predict the future. Then we make the most of our predictions.
So what will it be? Let me start hearing reasons for speculative moves before the end of the year. Make your arguments as to why speculators will jump on a coming bandwagon. Then we find the leader and the lowest floaters and we wait. . . like perfectly camo'd deer hunters, 12 feet up in our camo'd perches, with our feet warmers and binoculars. . . .and strapped in tightly, in case we fall asleep [the number one accidental death in hunting is now deer hunters falling out of trees when they fall asleep].
For those new to my methods. . .we tend to change our colors with the market. . . morphing to better play the trends. We don't follow the trends. We don't chase stocks. We predict the trends and position ourselves in the future winners. . . and we wait. Simple method. . .tried and true.
For a clue on how often we scored 100% to 2000% our money last year with this method, just ask William Jepsen, who has been here with me since day one [and who has 3 decades of trading experience]. Ask him approximately how many stocks we hit for 100 percent and how many were well over 100 percent that he can recall. You won't believe the answer.
And so, hunters.
You have your weapons. You have your gear. It's a beautiful day to bag a deer.
Rande Is |
