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.
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