When 70% Gains in 10 Minutes Is Bad I was speaking at an investing conference a few years ago and, as usual, I arrived at the room for my next session a little early.
The speaker ahead of me was still talking, so I stuck around to hear what he had to say.
Within a few minutes, he started talking up a small stock. I mean a really small stock – like around 30 cents a share small.
I could see how curious everybody in the room was, so I did what they did. I pulled out my phone and looked it up. Tick after tick, the price kept going up.
Within 10 minutes or so, that stock was about 70% higher. It was still tiny and trading just over 50 cents per share, but 70% within minutes is huge.
And in this case, a little frightening.
The conference attendees in the room were buying shares... even as the speaker talked about it.
When it was my turn to get up on the stage, I did a good job killing the excitement in the room by telling them my dishwasher story... Busted! It's not an unusual story, but the point is critical.
Our dishwasher had recently failed. Happens to all of us, right?
My wife and I did what most folks would do. We went to Home Depot, Best Buy, Lowe's, and other stores. We read Consumer Reports and online reviews, researched brands, talked to friends, and collected information.
We spent about two weeks looking for the best dishwasher at the best price before buying one.
I asked the people in the room how many would have done the same thing. Most everyone raised their hand or nodded in agreement.
Then I asked: "But how many of you just bought this stock without ever hearing of it before or even knowing what the company does... just because the guy before me told you to buy it?"
Told you I killed the excitement.
I wasn't trying to make them feel bad. And honestly, I hope they made money.
I was trying to help them avoid big mistakes in the future.
The truth is, most of us research our TV, dishwasher, and other consumer purchases more thoroughly than our stock purchases.
I understand that bigger consumer purchases are important. We don't want to spend our money foolishly.
But the same is true for stock purchases. In fact, I would argue they are even more important. Taken collectively through the years, your stock purchases can have a much bigger impact on your life than a flatscreen or fridge.
Especially when they don't last as long as they should. We've all heard and said, "They don't make them like they used to."
It's called planned obsolescence. Clever, huh? Sounds so much nicer than, "We're making them cheaper, so you have to buy another one much sooner."
When it comes to what I would call the important but smaller stuff, everybody wants to put in the work to understand their choices and make the best decision. But when it comes to stocks, too many folks skim the surface and hope they're right.
Reading about a company or hearing a speaker talk about a company should be the starting point, not the end.
You need a process, a methodology, a game plan to make the right decisions – decisions that ultimately grow your wealth. And you need to make sure it works. Include These Predictive Factors In Your Stock-Picking Process I know firsthand how miserable investing can be without a successful system to guide you.
I was like those people in the room who bought stocks that I heard good things about... or I thought looked like they would keep going up... or bounce back after a big loss.
It didn't work. I lost 19 of my first 21 trades.
My boss took the opposite side of my trades... and made money while I was losing. Talk about embarrassing.
My lack of research was all the research he needed to know that my bet would likely go the other way.
I quit until I could figure it out and give myself and high probability of success. Until I could win a lot more than I lose, and have my winners be bigger than my losers.
That's an undisputable path to successful investing, and you can't get there without knowing what data to pay attention to and how to analyze it the right way.
The result is my Quantum Edge system that emerged from lots of hard work and money. I can count on a 70% win rate, and I have long recouped the money I put into developing the system.
You're welcome to join me and reap the same benefits of my system, but if you prefer to do it on your own, I recommend you start with these three areas that together help forecast higher prices.
1) Superior fundamentals: the strength of the business. The company must grow sales and earnings, make a profit, manage debt, and other key factors.
2) Strong technicals: the strength of the stock. It should be trending higher, getting bought on rising volume, and be among the leaders in its sector.
3) Big Money buying: the money that moves stocks. Institutions deploy massive amounts of money that moves stocks. This is trickier to do on your own because institutions try to cover their tracks, but you can look for unusual volume in an uptrend as a starting point. I wrote algorithms in my Quantum Edge system to see when stocks are exhibiting the signs of institutional buying, based on my time running a trading desk and making these very trades that I now detect.
When these three things align, your odds of winning go up. Your odds of bigger gains also go up.
While it would be nice to develop a quantitative analysis system to research and find the best dishwashers on the planet, I won't be focusing my efforts there anytime soon. A proven system for picking stocks that make you money is much more important.
I know firsthand how much work goes into developing a system and keeping it going, which is why I automated the Quantum Edge system to update every night with fresh data and analysis on roughly 6,000 stocks. I recommend the best of these stocks to my readers... and I love when they do additional research on their own.
You're more than welcome to leverage the results – you can click here to learn more – but whatever path you take, please do your research, stick with a system, and rely heavily on data more than your gut feeling or your neighbor's stock tip, no matter how well intended it might be.
Talk soon, 
Jason Bodner
Editor, Jason Bodner's Power Trends | 
没有评论:
发表评论