RSS

Category Archives: stocks

Goin’ Against the Flow


Contrarian [courtesy Google Images]

Contrarian
[courtesy Google Images]

This article expresses some of my notions on investing–especially in relation to the “buy low, sell high” mantra.

 

MarketWatch.com reported in “Opinion: Almost no one believes the stock market will fall” that,

 

Everyone believes the U.S. stock market has reached a permanently high plateau. . . . A recent Investors Intelligence survey showed bearish sentiment is at its lowest since 1987 (13.3%). . . . short-sellers have nearly disappeared along with the few remaining bears. . . . the VIX (“fear index”) is at historic lows (near 12), which reflects investor complacency.

“Put another way, almost no one believes this market will go down.”

 

As I’ve repeatedly observed, the fundamental strategy for profiting from any investment is “buy low and sell high”. You buy an investment for $100 (when its price is low); you later sell it for $200 (when its price is high); you make a $100 profit.

Conversely, if you buy an investment for $100 (when you mistakenly believe its price is low) and later sell it for $50 (when the price is even lower), you’ll lose $50.

The theory behind the “buy low and sell high” investment strategy is obvious and simple.

In practice, however, “buy low and sell high” is complicated and hard to apply because it compels investors to:

 

1) it diligently and independently research the current and historical price of whatever stock they’re attracted to; and

2) act contrary to the “conventional wisdom” of mass of investors precisely whenever that “wisdom” seems strongest.

  Read the rest of this entry »

 
7 Comments

Posted by on September 30, 2014 in Economy, Investment, stocks, Values

 

Tags: ,

60 Minutes: the U.S. Stock Markets are Rigged


60 Minutes recently ran a story on the US stock markets entitled “Rigged” that was critical of integrity of US stock markets.  None of this is news.  But, when 60 Minutes makes a report on these subject, you can bet that  significant changes are imminent.   The 60 Minutes story may help cause a stock market decline for two reasons:

1) The stock markets are artificially rigged to support ever-higher prices. Although the current stock market is in one of the longest and strongest bull markets in history, US stock ownership is at a record low. There may be credible reasons to explain this anomaly, but generally speaking, if US stock ownership is at a record low, that should translate into reduced demand for stocks. If the demand is down, we should expect prices to to also be down.  Thus, stock market indices should be falling rather than testing record highs. This apparent violation of fundamental supply-and-demand principle leads me to suspect:  a) the market is artificially supported by some sort of rigging; b) without that rigging, the the stock market indices will fall; c) given that this rigging is being publicly exposed by 60 Minutes, it’s bound to be diminished or stopped; and d) the prices of stocks will suffer a serious decline.

2)  The stock market industry is unworthy of your trust.  Thanks to high speed computer trades, the stock markets are artificially rigged so as to rob investors of part of their profits.  Insofar as this problem is being reported on 60 Minutes, we can expect to see a serious of government and Congressional investigations that will not only amplify the current “can’t trust stock markets” message, but also uncover other instances of market rigging.  If people can’t trust the stock markets, they’ll be less likely to invest, U.S. stock ownership will decline further, and US stock market indices should fall further.

Implication:  The probability is growing that that we will see a significant stock market “correction” in the near future.   Those who invest in the stock market may want to reconsider that choice.

video    00:14:56

 
26 Comments

Posted by on April 1, 2014 in Fraud, Lies, Morality, stocks, Video

 

Tags: ,