[Analysis paralysis/trusting gut dilema] A couple years ago, I made some increadibly lousy decisions by not doing careful analysis, and have probably let the pendulum swing too far the other way. In the last year, I have sat frozen while three significant short term opportunities evaporated when the market overreacted regarding issues I was somewhat following.
Dec 97 LARS plunged from low 10s to high 7s in an overreaction to a release. A few days later it was back near 10.
March 98 DAOU plunged from near 25 to 16 when an analyst issued a reservation about future earnings without even revising his EPS estimate downward. I could not reach my broker at 3:50, and missed the oportunity - it was near 20 next am as a lot of others realized the market had overreacted, and was mack at 25 again soon.
Recently SAVLY slid from mid 50s to 35. As DAOU was overvalued at 25, so SAVLY was overvalued at 55. I almost bought in at 35, but got negative feedback on that move, as I had with DAOU. Couple days later it got a high as 43. There were serious bolinger band violations in both cases.
As I mentioned before, these stocks were overvalued when the slide began, but both have excellent long term prospects.
So with that background, the question is: When do you go with your gut, especially with as issue follow somewhat, but are not emotionally attached to. In each of these cases, I would have been looking for short term profits only (normally, I have a much longer term perspectve).
Not doing things rashly may save your but by avoiding stupid moves, but some opportunities only exist for a short time, and taking the time to do a thorough analysis may guarantee nothing but a lost opportunity.
Again, there were three of 40 companies I follow prices and some announcements on a daily basis, so I already had an appreviation for valuation and trading ranges.
Your thoughts? Thanks, Scott |
