Here is an interesting post from Raging Bull on the philosophy of investing in a winner>>
By: memyself
Reply To: 18193 by therealquince Wednesday, 24 Nov 1999 at 9:34 AM EST
Post # of 18199
My Views on Investing":
Anyone that gets so nervous that they cannot wait as long (as short)
as another week or two should reconsider their fortitude
for investing. Not just in relation to TrackPower but to all stocks.
If you look at any of the huge money-making stock market stories over
the last five years and you wonder - boy it was so easy -
just invest $100 in Dell and take out $750,000 five years later - why
couldn't I have gotten in on that?
The answer is you could have, but most people are too blind, too
squeamish, too quick to panic, too quick to take short-term
profits, too near-sighted to envision the true magnitude of the "down
the road" potential, too easily excited by "positive posts"
while at the same time too easily vexed by the "negative ones" to
realize what they have in front of them until it's gone.
There are no "sure things" but some are closer than others.
Many of the most successful investors wear "blinders", ear plugs,
whatever it takes to remove themselves from the daily grind
of pessimism and the weekly/monthly grind of volatile stock swings as
they go by their instincts.
Study any of the most successful stocks over the last 3 years and
chart what was being said about them "then" and how
investors were reacting to those words "then" and compare that to
where they are "now." and you will see some startling
contrasts.
A perfect example is AOL. (Yes, we all realize that the Internet
sector has been sagging as of late, but regardless of that, an
investment in AOL 2-3 years ago would still be worth major bucks today
after 6 stock splits.) Look at the history of AOL's last 3
years and you will be amazed at the moments of pessimism and stock
downturns. Most of the daily followers of AOL that
bought in 3 years ago were scared out 1 to 2 years ago. It sounds hard
to believe but there were many times that you could
have read AOL's obituary.
I know, because before I started investing in the stock market, I said
to myself - AOL - wow, it was (is) so easy to make money
- everybody should be rich but their not. - Why? - So I went back and
read every article in "The Street.Com's" archives and
looked up countless prior news and commentaries on AOL at various news
sites to understand and help me gain the
"confidence to relax."
The answer is that throughout any company's path to success there are
many moments of anxiety, moments of doubt,
moments requiring great patience and moment's that invoke: "Murphy's
3rd Corollary of Stock Investing" which states:
"All stocks experience downturns just long enough to induce you to
sell on the morning of the day that it rebounds." And also…
"Murphy's 2nd Postulate of Psychological Market Parameters" (commonly
referred to as M2PPMP) which indicates that: "For
every piece of good news that invokes you to buy there will be two
pieces of follow-up commentary that will convince you to
sell too soon."
So who made out the best in AOL (even with its currently depressed
price?) Certainly not the M2PPMP crowd, but the
investors that wore their blinders. I'm content to put my blinders on.
But alas, in the end, everyone has to make their own decision based
upon their own lives. But if a few weeks or a few
downturns is all that it takes to scare you out of what may
potentially be "The Stock of the Year" then so be it, fall victim to
M2PPMP and be content in the fact that you can still live vicariously
through the rest of us willing to go the distance and reap
the rewards.
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