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SPDR Dow Jones Industrial Average ETF Trust Message Board

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  • fingerprick fingerprick Feb 3, 2008 12:04 PM Flag

    Can Someone Explain

    For one thing, the Dow was down almost 20% to 11,500 and change from it's 52 week high of 14,280. Some would consider that oversold. The market pendulum often swings farther than we think it should, and that includes to the upside.

    It's always a bummer when you make a prediction, like there will be more bad economic news, and then make a market bet based on your prediction, your prediction comes true, but the market moves in the opposite direction. Sort of like completing a pass for minus yards. How many people have bought a stock thinking there would be a big upside earnings surprise, which actually happens, but the stock price goes down on the news. Here is another, someone buys a stock thinking the company is ripe for a buyout, and it happens, but the buyout is for less than the current stock price. That is why I almost never make investment decisions based on predictions, certainly not my own predictions. I can't tell you how many times I have been right and lost money. Some how I have never been wrong and made money.

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    • How many people have bought a stock thinking there would be a big upside earnings surprise, which actually happens, but the stock price goes down on the news. Here is another, someone buys a stock thinking the company is ripe for a buyout, and it happens, but the buyout is for less than the current stock price.
      =====================

      Ain't that the truth.
      So how one should play this market then?
      Just based on fundamental & ignore all the news, charts & signals?

      • 2 Replies to akristian
      • This is where money management is applied. Keep the losses small, know your price target, and let your winners reach the target. As an example, say you have 3 losses where you're stopped out at a $1 loss. Then you had 3 wins where you made $3. You would be $6 ahead, and that's only being right 50% of the time. Simple huh? Right.....until you throw in greed and fear......it's harder than it seems.

        Plannig the right entry and money management are keys.

      • "So how one should play this market then?
        Just based on fundamental & ignore all the news, charts & signals?"

        I say stay invested with some cash available to take advantage of the dips. I am not saying to ignore anyghing, but also don't make big bets either, make minor adjustments according to what the news, charts, and fundamentals are saying. That has worked for me long term, not sure about day traders, that's not my thing.

 
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