While this is NOT a stock pickers thread... I still like to use single names (stocks) for educational purposes.
Watch APPLE (AAPL) shares...
This is another stock that falls in that "priced for perfection" category (IMHO)... and here we have the iPhone 5 release and now there is a strike at a plant that makes them.... so will that affect their earnings and sales numbers? Long or short term? Blah blah blah.
The strike isn't a big deal - stuff like this happens all the time... we're certainly not unfamiliar with strikes or other hiccups that affect a company or industry... but WHEN YOUR STOCK IS PRICED FOR PERFECTION --- then we have another matter entirely. And we have an educational event to watch.
I'm personally happy to NOT be invested in Apple... and I have made a bunch of dough off this stock. BUT as it reached a price point where a 1000 shares cost $650K to play - that became a point for me to just "move on". It became a percentage game to me... again -- explaining my thinking so that you all can gain some different ways to think about stuff on your own -- a 10% move UP from $650 a share is $65 -- so you have to ask yourself at that point - are you really investing - or are you just gambling and hoping like hell that someone else is willing to buy your shares at the higher price. Here's my personal take.... I'm joe average guy in thinking power.... and I'M having double and triple thoughts about buying it at $650 (in fact I wouldn't / didn't). If I'm having that thought - don't you think others are too? And if you'd bought at $450 or $550... and now have a HUGE gain.... are you thinking about buying more -- or are you having thoughts of SELLING and locking in an outsized gain. If it moved up another $65 to $700+ would you think about selling?
That's what I want you to watch and learn from. This is a "market" -- I don't give too hoots about "metrics" and P/E ratios - and whether or not the talking heads come on TV to tell you all manor of financial facts. In the END -- it's people making a personal decision about their money. PERIOD. The thinking is about when is enough profit in a stock, enough? Not so much about how much you "might" leave on the table if you sold today rather than next month. You start to worry about LOSING that profit. The minute the shares go backwards --- more people start thinking (and seeing!) the "loss" even though that "loss" is only a small percentage of their outsized gain. We're all GREEDY!
So --- just like cars (or houses!) -- when everyone is paying way too much for ordinary cars on Barrett Jackson --- things are good..... BUT when the prices start to fall --- and they fell FAST.... and then people start thinking -- "well... my car was worth $200 grand -- and now I'm seeing bids of ONLY $125 grand -- I better sell while I can still get that much money!". Doesn't matter that they didn't sell at $200 --- it matters what they might miss if they don't sell now. FEAR sets in! Fear and Greed make markets. Regardless of what anyone says. Learn from it. Learn when to be greedy and sell.... and learn when fear drives your decisions... I love to buy when everyone else is trembling (thus selling) and you need to learn to SELL when they're all greedy and buying. You also need to watch and control you're own fear and greed... That's why old adages like "pigs get fat and hogs get slaughtered"... and "buy low and sell high"...
I'm not saying that APPLE will go lower - or higher - or won't be the perfect DIP buying scenario.... What I'm saying is that if you're not invested in it - use it's swings to learn from it. Ask yourself how or what you'd be doing "IF". Then that's a reference for your actions when you're ready to take the plunge in some other name. Are you buying in greed mode or are you selling out of fear - are you investing or are you gambling? Learn to check yourself it will make a difference in your investing.
