The IS a correlation between the amount of stock issued and the stock price.
Berkshire Hathaway stock...for ONE SHARE is at a market value of $124,335.00
Berkshire IS NOT over issued.
I just blew some muppet minds...they will never understand basic math or valuation.
A good approach could be cashing out some of your portfolio right around the market high. Keep that cash reserved for day trading etc... and when the market tank you can just buy the dip on strong companies like Ford, Apple, or less hyped IPOs (rare) etc... I'm assuming you're already doing that. You're locking in your profit, reducing your risk, and have additional options. The current market is either range bound or a slow moving uptrend so this strategy can be effective.
Good post Tung. As of lately, especially with the use of computers and cheap brokerage accounts, there are more and more unseasoned day traders. I, for one, day trade occasionally, but I still have faith in diversity and long term holds of certain stocks. I have shorted FB and made some money and I will keep an eye out here because IMO after lockup expiry, this thing falls fast. Great time to short around August. GLTA
"Investors" if they are fully diversify than their portfolio performance will be tied to the index performance for the most part. However, they are fully exposed to crashes or systematic shocks (which is very common these days) that will rattle even the strongest mind. If they buy and hope than that is a loosing proposition because the market will be irrational longer than they can remain solvent. What happen if you have to cash out when the stock is tanking? Trading or "short term investing" has it's own issues of not catching the entire move and more time consuming etc...But at least there's is less guessing and you can work both side of the market and there's more opportunities to recover if you're nimble enough. Try explain that to the muppets and they will say you're full of BS.
This era most stocks are "traded". Stocks were once long term investments. We invested in a company based on earnings and growth. Times have changed and IMO not for the better of the economy as a whole. This FB IPO and so many like it these days, is just bad for the market. Investors lose confidence and pull out across the board. Little money is left on the table for the retail investors so they sell on hype. Uneducated investors lose money, want to sue someone for making a bad decisions, and put the market as a whole in a tough position.
Great post missy. One point that I would like to bring up. Even at $123,564/share and with a total market capital of 204Billion, Berkshire Hathaway has a P/E of only 17x.
Even Google and Apple have P/E's below 20.
However FB has a P/E of 91x which is subject to ridicule just by looking at it. LinkedIn has a P/E of 721x!!!! Wait till these stocks capcize. Anyone who invested in this stock expecting it to grow will be sorely disappointed.
Any IPO that over issues stock is going to see what FB is seeing. If they would have issued less shares, the stock price would go up. Simple supply and demand. Thing is, Zuckerberg and his cohorts are greedy and cashed out on issue number one. Now if they can manage to prop it up until lockup expiry, cash out numbers two and three are right around the corner.