Originally posted by macbear01
First of all, I have no Apple stock. I do not have an investment that causes me to react emotionally to this this kind of article.
I have a coworker that thinks he knows the market too, and the two of you sound an awful lot alike. It's not exactly comforting. Basically, what you are saying is that the market is based 90% on emotion (feelings and perceptions) and predictions (speculation that may or may not have any basis in reality), and 10% on reality (what the company is actually doing and the value of the company's assets - things that can be researched and documented).
You are probably right when it comes to daily trends, but when it comes to the overall direction and value of a stock, it is based in reality.
IF I had Apple stock, I might be thrilled with a high share price, but could never be comfortable with it if the company's financials and business plan did not support the share price.
The price, like everything else in the world, is simply based on what others are willing to pay. If something comes along that will grow profits and people want a piece of that future value, they may or may not pay a little premium up front on what the current numbers say.
It makes no logical sense to buy or sell based on analyst comments.
The analysts are well-compensated for their comments by businesses that make a killing off of the effect of those comments. Analysts laud a company's performance and predict outrageous gains, driving the price up. Their cohorts, generally institutional players, short the stock. The analysts then bemoan the company's failure to keep up a wildly speculated pace or just make something up altogether, eroding "investor confidence" in the company and driving the share price back down. Their cohorts cash in and they all share the wealth. Do you think that individual investors are affecting the price this much? I don't think so.
Here is the deal though. If you realize what these folks are doing and why they are doing it, why be one of the sheeple who wander along to the slaughter? Why not follow the trend of those institutional folks who you claim are making a killing?
Someone made up some news yesterday because they want to drive the stock down to $49 or so (a generally agreed upon safe numbers) buy a boatload of it and then watch it go back up.
So why not simply not buy before $49, buy then and make a killing. No one is telling that you have to hand over your money then.
It is one thing to see the nature of the market and be pissed off about it. It is entirely another to see it and take advantage of it.
I'm not really a market player and certainly not one to give advice. One stock in which I invested $2500, is gone but should have a distribution of company assets to shareholders someday soon, which will not show a gain, and the other, which garnered $500 of my hard-earned cash, has lost 90% of its value and will probably be gone soon.
Sorry to hear that.
. I, too, did not realize that "the market" and "the street" are carefully-crafted fiction, loosely based on reality.
Now that you know this, you can make back much more than you lost. It is a relatively cheap education.
The market is gambling, plain and simple.
It's simply human behavior and informed averages. You gamble when you get in your car to drive to work. There are no guarantees.
As an individual investor, the only way to make serious gains in the market is to be lucky enough to have accidently ridden on the coattails of some institution's plan to manipulate a stock or to understand how the fictional stories are crafted and be able to anticipate the next chapter.
You say this like it is a bad thing. You let some big company do all the research, make all the buys to move the stock, and do all the manipulation to insure a result and all you get to do is grab the profits. Life is so terrible.
You cannot merely research a company's assets and business plan, determine that they are undervalued at their current share price, buy in, and expect that the situation will eventually correct itself by an increase in the share price relative to the company's actual documented and reported value.
You can do this, but you have to be willing to buy and hold very long. (10+ year view) In the meantime there are places where you money might earn a better return or not. It will earn some return doing what you describe, probably a pretty decent one.
. I believe that analysts are merely tools that institutional investors use to prey on individual investors. So, I'll never be a big market player unless I can turn off the logic center of my brain and learn to play the game.
Silly, don't you realize that what you have just done is turned ON the logic center of your brain. People are sheep and will do whatever these nimrods tell them. It is therefore logical to learn how to make money off that behavior. We live in a world where people get drunk and let bulls chase them through streets, where they jump out of planes for recreation, where we post on a forum about our hard-on for some silicone and plastic named after a fruit.
You've taken the first step.
"If you are a dreamer, a wisher, a liar,
A hope-er, a pray-er, and magic bean buyer...
If you're a pretender, come sit by my fire
For we have some flax-golden tales to spin,
Come in, come in!"