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Whoa, John, that sounds suspiciously like clear thinking there at the end.
One story in particular is a tale for our times. It's the true saga of my friend, whom I'll call John Doe so as not to publicly humiliate him, a successful professional gambler whose luck changes when he ventures into the stock market. A victim of market timing and momentum, John can't seem to hold onto any stock longer than a few months and, hence, has ridden the downward spiral of the short-term player.
You can't count cards on the New York Stock Exchange. Knowing when to hold 'em and when to fold 'em may work at the green felt tables, but Fools know they can't predict the market. Only research and a long-term strategy will let luck be your lady.
Here is John's story. Let's just hope it's never yours.
You'll be glad to know I haven't lost my touch. I decided to get back in the market, buying tech stocks, three days before the Nasdaq plunged 575 points in one day. The only way out was for me to sell what little I had left. Between a 50% loss on some stocks and 50% margin, I lost close to 100%. Now the market can rebound!
I should be a key technical indicator on CNBC. Let me put it to you this way: Iomega, CMGI, Presstek, any stock that went up a zillion points during the course of time, you can bet I lost money on. It's a certain skill and I'm proud, very proud! What goes up, must come down -- but only after I've bought it at the top.
What I enjoy most is when the CNBC guys say that it's investors taking profits when a stock goes from $150 to $30. How about the guys who bought at $150? What are they taking? Hemlock?
I used to look for good companies with ever-increasing earnings, good products, new stuff in the pipeline, a record of consistent profits, not overvalued, etc. Problem was, whenever I'd buy them they'd go down and stay down. I even subscribed to Investors Business Daily for three years, proving that a little knowledge is a dangerous thing.
I used to keep stock certificates myself and once sold a stock I owned that way -- but the certificate disappeared in the mail, voiding the trade. By the time I was able to get a replacement (which cost something like $255 and took weeks), my investment had dropped by $6,000.
After looking at my record, I shorted a couple of stocks. Guess what happened to them? Yep -- up, up, up. I'm a reverse alchemist. But I'm not scared. I KNOW that I'll always lose money on my investments, so I don't worry about it!
Many shareholders' lawsuits have been launched against companies in which the CEO made nice statements about the future, only to see the stock tank. I have received so many of these notices about stocks I owned that I am now on a blind "copy to" list whenever such a lawsuit is initiated, because lawyers figured I probably owned the stock.
If I bought a well-managed company whose earnings had gone up 20% a year for the last 15 years, it would immediately find out that its chief competitor had come up with a product to do the thing better, faster, and cheaper, and my stock would tank.
The one thing I did learn and sincerely believe: With the advent of so many day traders (most of them, I read in one survey, have turned in big losses), so many discussion boards ("We're in the chips, keep buying, Go!"), the market has turned into one gigantic casino where PERCEPTION is everything. For now, many people have lucked into profits. Whether they will continue to do so is another question entirely.
(Note to self: Ask John Doe to short the Nasdaq.)