Kenneth,
I read the post and I share your concern about what happened to
MSFT. Unfortunately I must say I agree with the article. I think when you look to the brokerage firms, who hire derivative experts to create new investments vehicles, I even have to wonder if they don't have a hand in cercumventing the laws - when it gets too hot to handle then they back off and find a new way. After all, they hire the best and brightest the world has to offer.
In addition there has been a lot of articles in US magazines about
people becoming day traders in increasing numbers trying to make a fast buck. The true day traders I've talked to in chat rooms start the day with NO POSITIONS and end the day the same!! They take advantage or even create such markets.
Further there was a 20/20 ABC article Friday night about how the mafia
has come to manipulate the small penny stocks with false prospectuses
and straight out lies for the last 10-20 years!!! They buy a stock or
option on it, buy a few brokers to hype it up, and sell it before the
truth comes out and it collapes!!
This is all why I do not get excited over short term moves in the
market. I buy stocks with something of a Warren Buffett meets Peter
Lynch approach. I want stocks with value, good debt structure,
liquidity, ROA and ROE numbers, like good CASH FLOW (not necessarily
just net earnings since there are accounting ways around things), and
look more at future P/E not past earnings. I must understand the
industry the stock is in, and how it will advance it and be effected by
economic changes. No matter how good the raw numbers, I don't buy what
I don't understand - if I have to wait for someone to tell me to get out - it is much too late!! I've missed out on some real rockets, but I've also never been nailed with lead balloon either. I invest for atleast a year's time frame, more in the 2-5 year. I don't adjust my portfolio unless a stock gets rediculously far ahead of itself. I have ridden out the corrections, and even picked up a few stocks on margin and turned nice profits a day or week later when the market has been hit by these game players. They can shake the market up over the short term, but earnings still prevails in the end.
If the game players push a stock down that you own, ride it out; if you can afford to, take advantage of the discount and BUY!!
thank you again for your warnning and advice,
Yaacov |
