Monday, April 9th
Dear Member,
Every day the stock market opens there are only two questions on the minds of those trading the stocks back and forth.
1. "Is the stock of this company worth more, or less than it was yesterday?"
2. "Was yesterday's closing price overvalued, or undervalued?"
The second question is by far the most important. If one were only to ask the first question, it would be based on the assumption that the closing price from the last trading day was a fair price. And, it never is.
Isn't it interesting? The questions one asks are so often based on assumptions are they not?
So, when you trade, you should never actually believe that the price you get for a stock is its "fair value". It is either overvalued, or undervalued. All the time.
However, stocks that are overvalued can often also become very very overvalued! Just so long as there is a "greater fool to sell to". And, usually there is. So, it is very possible to make a lot of money in the market selling to a greater fool.
Just don't be the last fool! The last fool always loses.
Never sell a stock just because it's "overvalued" as long as you think there is a greater fool to sell to.
And, never buy a stock just because it is "undervalued" or a "bargain" as long as there are greater fools that will keep selling at lower and lower prices.
If a stock is rallying and rallying and breaks out to new highs and you finally say, "That's it! I HAVE to buy this!" Then, you are the last fool.
If you watch a stock fall, fall, and fall, and it finally gets to the point where you say, "That's it! I HAVE to buy this!" Then, you are the first genius. Congratulations.
Good Trading,
IntradayTrades
Dear Member,
Every day the stock market opens there are only two questions on the minds of those trading the stocks back and forth.
1. "Is the stock of this company worth more, or less than it was yesterday?"
2. "Was yesterday's closing price overvalued, or undervalued?"
The second question is by far the most important. If one were only to ask the first question, it would be based on the assumption that the closing price from the last trading day was a fair price. And, it never is.
Isn't it interesting? The questions one asks are so often based on assumptions are they not?
So, when you trade, you should never actually believe that the price you get for a stock is its "fair value". It is either overvalued, or undervalued. All the time.
However, stocks that are overvalued can often also become very very overvalued! Just so long as there is a "greater fool to sell to". And, usually there is. So, it is very possible to make a lot of money in the market selling to a greater fool.
Just don't be the last fool! The last fool always loses.
Never sell a stock just because it's "overvalued" as long as you think there is a greater fool to sell to.
And, never buy a stock just because it is "undervalued" or a "bargain" as long as there are greater fools that will keep selling at lower and lower prices.
If a stock is rallying and rallying and breaks out to new highs and you finally say, "That's it! I HAVE to buy this!" Then, you are the last fool.
If you watch a stock fall, fall, and fall, and it finally gets to the point where you say, "That's it! I HAVE to buy this!" Then, you are the first genius. Congratulations.
Good Trading,
IntradayTrades
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