Lesson # 45, follow-on, to Lesson # 44: to all: thanks, Mike, please read this carefully, it will clarify yet further....glad to help....
* please realize, many nice people unknowingly try to either put words into my mouth, or misread what I said/meant....no sweat...try this:
* obviously, one problem with human nature, which my "PSYCLE sm" tries to overcome in it's tenets, is "perspective"....for one person, short-term is 5 minutes, to another, it might be 5 weeks, or months, etc. similarly, to one person "cheap" pertains to underlying fundamentals only, to others, who incorporate chart price history, it means something else, right ? so, as I teach, all stocks, to me, relate to their ALL-TIME high-low levels, (at least the last 2-3-years worth) and NOT just "recent activity".... very important to appreciate....
* second, as I teach, the ONLY thing that matters when trading, is the stock price level/move itself ....regardless of "how" it gets/got there....meaning, NO stock, which was under 3. in the last year or two, and is now 20., is ever "cheap"....period....it may still bounce in/off stage 5 or 6 in my "PSYCLE sm", for sure, even being exploitable on the long side, down from, say 40....buy it was/is not 'cheap" at 20., up from 3. now, when/if it might fall from, say, 40., to under 5-10., then base again, then, maybe after further reserach, my "PSYCLE sm" would say it is "cheap", then....again, this is just MY version of the term....everyone is certainly entitled to their own opinions....of course, there are not many of us whose actual long straight option accounts have risen several hundred percent in the last 6 years, with over 40 completed trades.....but I digress....
* "value" is also subjective, and means nothing to me....if a stock with assumed lousy fundamentals rises a bunch anyway, no one long, questions it's "value"....they are just happy it rose...similarly, when a stock of a co. with assumed great fundamentals, falls, everyone questions it's "value"....so "fundamentals as a timing/confirmatory element" are pretty much useless, in historical fact....at least they do not work often enuf to let rule our decisions, dig ? again, as I teach in early "Lessons" on this thread, "PSYCLE sm" traders just do not "label" anything, ever....period...this removes all needs and PSY-chological traps, in this realm, and focuses us on just, the stock price itself.... as you know, one just trades the stock, not the company...they are often two different things....
* last (as I also teach in early Lessons...please re-read them all), I certainly DO view/peruse all fundamentals quickly, on any issue potentially tradeabl, once the technicals look good....I just make sure, when long, things are o.k., and no pot. "hidden bombs"....
now, when/if GLM falls a lot more, to wherever it ends up basing again some day in the future, if at that time GLM, has a ton of cash, no debt, growing, earning money, etc., that certainly WOULD factor into the tail end of my decision-making process, but--- and here is the "PSYCLE sm" pov--- unless it's chart and ind. group shape up as well, I will not let the fundamentals force me in, if the chart is not seemingly right---but, great technical chart patterns, alone, might get me in, even with "supposed lousy" fundamentals.....hope all this is clear.... again, I ignore all subjective stuff....
* the above is very valuable stuff to know, and 95 % or more of all people, including the pros, do not know this....or fight the fact.... good for us...anyway, I do appreciate your comments, it's just that doing things my way has really helped many people, over many years, and most attempts to employ subjective "value" to stocks has just not done as well, this century....Value Line is a great example of this ....having followed them for 25 years, I have noticed the vast majority of the time, they only rank a stock # 1 or 2, AFTER it has already risen a bunch, and hardly ever rank a 4 or 5, until AFTER it has already fallen a lot....it may still rise more, after already being up a ton, but that same stock was much lower risk/high potential long buy, near it's lows, when it looked much worse, right ?
and, germain to this thread, most all drops occur, well before the "fundamentals" are noticed as "subjectively worse" by the masses ....again, this is taught in my earlier Lessons...perhaps, ask, again:
"if" fundamentals work(ed), then how could any stock with growing EPS, loved by all, fall from 35, to 20, so quickly, as I predicted for all the Oil Svc., like GLM did ??? seriously, I am not being facetious... my research goes back decades, not just a few years back...
*** my final point: all things being even, I would rather be, long, from today, in a "PSYCLE sm" basing issue, currently down a ton from it's high, with decent "fundamentals", like some techs and metals, with close stops, than any potential stage 5 or 6 issue, like the oil services and many other "extendeds" even here from 20.....GLM "could" bounce a bit, as I said, but, the depresseds in bases should bounce more, percentage-gain-potential-wise....
have a great long weekend, all.... |
