Rod, if your own son is exhibiting this kind of frivolous speculative behavior, I would take that as an extreme caution sign. The stock market is not a sure thing and he could have lost that money and be deeply in debt on a stock market bet. What if he bets, the day before a downturn. These kind of extreme profits and extreme behaviors only show themselves at market peaks.
You said in a recent post that you only look at the individual stock and not the macro-environment, but still you post here on the Big Picture thread, this a macro as it gets. Micro environments get swept away with macro changes.
I am a self-employed businessman also. I know how hard the little guy has to work for a buck. I urge you to consider that you may not make another 600% in the next year, but that there is a large possibility that your profits would turn into losses with a buy and hold strategy on the top of the cliff.
I'm not saying the break will be tomorrow, or next week, or next month, but the possibility is there, with the most overvalued market in history.
Please click this link and scroll to the bottom and look at the book value chart:http://www.gold-eagle.com/analysis/stocks_over-valued.html
There are many ways to cook the accounting figures for earnings, inventory, etc. You know this as a self-employed businessman. One set of books for the taxman - correct.
The one thing that is difficult to corrupt is the book value of a business. The value of real assets minus liabilities. This is the core reality of what a business is worth, If you had to sell it tomorrow.
As you can see from the graph, we are sitting on a powder keg much larger than 1987 and I would suggest you grab a hold of your son and shake him out of this gambling mentality. If he's done it once with great success, why won't he continue. He's likely to come up craps one day and it will all be on an 18% interest charge card.
Best regards and good luck,
Bob |
