Buy on bad news – sell on good news – Stock trading

One of my first lessons in stock trading was not to panic sell. When rumors hit the street (now days the web),  I ignore them.  Some people like to make money off the bounce of a stock that has been hit by rumors and news, which are generally oversold. I have not tried in a long time.

Are you investing your money on emotion or strategy? That is the question you have to ask yourself the next time some news and rumors are circulating.

I am a gutless trader

Maybe it is because I did not have the courage, or I am not a short-term trader but a chess playing strategist. Not that I am a better person than people who do such  short-term speculation, rather based on experience, it is very hard to buy or sell stocks on a day-to-day or week to week basis. It really is not investing or the kind of investing I am good at. If you are let me know.

If you can make money off of bounces, more power to you. Further, if are one of the guys that can jump out of the market, right at the right moment based on news, you are a better investor than I. However, news is rarely black or white.

I use to set up Bloomberg and Reuters financial news feeds

I use to set up news feeds for the Portfolio managers in NYC and use to tell them, do not read the news, it will do no good.  I have never rarely sold a stock at the exact moment I should have. Instead I make a profit or reduce my loss by a percentage. I think moving averages or a system of investing is better.

Again why not trade on news and rumours, is this not investing? Hey I like to make money. I do not want to get into whether it is investing or not, but, as unless you have real information that other people do not (yet not considered insider information), making money off news is just speculation.

Because of my economics background I guess I believe the market has fairly efficient information. In the words of Stan Weinstein,  the tape tells all. You can see the information coming out on the charts before you read it on the web. Again the problem is there are a lot of guys out there living and breathing every tick of the price and trying to react in the same way.

Therefore, I have seen stocks go either way. I have seen stock rumors and news that turn out to be true and I should have bailed out, and did not. In contrast I have seem stocks news to leave the shorts in the dust.

Buy on bad news sell on good news

  • What I have learned is be more systematic in investing using quantitative investing and guidance from the charts, not reactionary.
  • Message boards and news feeds mean little compared to numbers.  I still read them mind you, just do not make major buy and sell decision off of them. I have been burned more by reading such things than not.

 

4 Replies to “Buy on bad news – sell on good news – Stock trading”

  1. Plasticmoney888 says:

    Investing:

    I own Pepsi. Simple, It’s Sold every where in the world 24 hours per day, PE is lower than Coke, Div 3.30% (not bad these days). When it goes down I buy more and get a better yield. If and when rate will go up its not a 100% income play so it will hold its grown base on it’s long term growth and chances are they will keep increasing that Div.

    And I like a diet Pepsi on ice with a twist of lemon. Ha ha ha …

    Trading: I would not go in to unknown territory. I find it works only once I get to know and get use to a stocks moving pattern over time. This can take a bit of patience but its well wort the effort.

    With time we kind of get to know the trading down side risk and the upside potential.

    1. Mark Biernat says:

      I love having a few stocks that I know and watch and track. When I worked at Merril Lynch there was this old analyst there, I thought he was like 80 years old but now that I am 48 I think he was most likely like 60. He was a stately excentric to say the least, he was OCD cleaning everything all the time. Anyway, he was an expert on Dupont. He watched the stock his whole career and he knew when it was under prices and over price. He would pick up a few shares when he felt it had value.

      If you can become intimately acquainted with a stock that you personally like you will get a sense of the trading range like the best technician, without having to scan the trading charts.

    2. Mark Biernat says:

      Besides everyone knows Coke cola is prefered by the Democrats and the soda machines in the White House change with a regime change.

  2. Plasticmoney888 says:

    Yes Democrats have no taste. Haaaaa

    Look at Tootsie Roll Industries, Inc. C (TR) -NYSE
    23.01 0.11(0.48%) It keeps going up to 28 and back down to the 22 range this as been going on for a long time. Its also a 0 debt company.

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