questionable buying philosophy

[Smiling JOe]

I am listening to Fox News weekend report, and these yahoos are picking stocks. One guy recommended as his pick, a stock which just reached a new high price. The guy following him commented that he liked that stock too, but he would wait and buy it after it went down and then came back up to a new high.

What kind of back@ss philosophy for investing is that? Goofer, can you explain this to me? It seems to be the same philosophy being taken by most real estate buyers. Anyone have any ideas, thoughts, or comments on this purchasing philosophy? IMO, it doesn't seem the smart way to invest one's money.

 

[SHELLY]

I am listening to Fox News weekend report, and these yahoos are picking stocks. One guy recommended as his pick, a stock which just reached a new high price. The guy following him commented that he liked that stock too, but he would wait and buy it after it went down and then came back up to a new high.

What kind of back@ss philosophy for investing is that? Goofer, can you explain this to me? It seems to be the same philosophy being taken by most real estate buyers. Anyone have any ideas, thoughts, or comments on this purchasing philosophy? IMO, it doesn't seem the smart way to invest one's money.

This philosophy is used for stocks which have good fundamentals (i.e., will support continued growth) but are believed to be currently overpriced.

The pundits are expecting folks who've gotten in early in the stock's run-up will take some profits off the table by selling off shares--and, if enough do, the price should come down to a level where they will be "fairly" priced (in line with fundamentals) or "value" priced (below fundamentals). At these levels, the stock is essentially "on sale" and investors who buy in at this lower level can reasonably expect returns on their investments while those who've bought in while the stock was "overpriced" are still trying to recoup their losses.

And yes, you're right, this is exactly what is happening in real estate, except the risks in investing in real estate are HUGE at this point (as folks are starting to find out now) compared to buying a round lot of Altria.

<p.s. "Round Lot" is 100 shares of stock....not a circular piece of real estate. Altria 'was' Philip Morris....not the name of a new subdivision. >

 

[Beemn]

My question would be why you would watch fox to get news?

 

[Smiling JOe]

My question would be why you would watch fox to get news?

To get the balance of another side. To listen to only one slant on the news will screw up your brain. I don't believe either of the two sides. I believe it was Tim Robbins who told a graduating class to "question everything always." I am a little more unique than the average bear, as I also listen to NPR, and watch CSPAN.

Shelly, your logic of buying after the fall makes excellent sense to me if the stock is a strong stock. However, in this particular case, maybe the guy just screwed up his thoughts when he spoke, because he clearly said that he would wait until the stock drops and then rises to a new high before he would buy, meaning that he would buy it at the new high. That is kind of crazy, don't you think?

 

[hi n dry]

I am listening to Fox News weekend report, and these yahoos are picking stocks. One guy recommended as his pick, a stock which just reached a new high price. The guy following him commented that he liked that stock too, but he would wait and buy it after it went down and then came back up to a new high.

What kind of back@ss philosophy for investing is that? Goofer, can you explain this to me? It seems to be the same philosophy being taken by most real estate buyers. Anyone have any ideas, thoughts, or comments on this purchasing philosophy? IMO, it doesn't seem the smart way to invest one's money.

That is the usual ?pump and dump? manipulation used by many mass media outlets to swindle the gullible masses out of their hard earned money and make some fat cat richer.

Why is a smart guy like you watching the crap on Fox News any ways?

The Fox News slogan: ?We distort and lie and our viewers comply?

 

[SHELLY]

However, in this particular case, maybe the guy just screwed up his thoughts when he spoke, because he clearly said that he would wait until the stock drops and then rises to a new high before he would buy, meaning that he would buy it at the new high. That is kind of crazy, don't you think?

Without having seen the program, it's possible that he's wanting the stock to establish a floor and then show upward momentum before buying in (he's a momentum investor then as opposed to a value investor.)

Investors use broadcast information to make them aware of stocks that may be worth a look (to research).

Speculators, on the other hand, dash to their computer and put in a market order for the stock they just heard about...which makes just as much sense as buying a condo that hasn't even been built yet from a salesman in a trailer parked on a vacant dirt lot....oh,....with balloons attached to the "Preconstruction Sale" sign.

BTW, do you remember what stock were they talking about?



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[TreeFrog]

Shelly sounds like an experienced follower of the markets. If you're interested in the markets, read Investors Business Daily. They understand the whole system, which is based on human nature and fairly predictable. The stock pundits on the tube are no more useful than their counterparts reporting on politics.

 

[Smiling JOe]

Shelly sounds like an experienced follower of the markets. If you're interested in the markets, read Investors Business Daily. They understand the whole system, which is based on human nature and fairly predictable. The stock pundits on the tube are no more useful than their counterparts reporting on politics.

Back in college, I read the IBD, regularly, and am very familiar with momentum investing ( -- lost my socks when I let it ride and went for a long walk), but not in the current market. Shelly, I didn't hear the name of the stock.

I like it when those guys say I own it (disclosure), and I recommend it. :funn:Meaning buy it so the price increases and I can sell it, before I tell you to sell it. I guess it is a Catch 22 for them. If they recommend it without owning it, we would question why they don't put their money where there mouth is.

 

[SHELLY]

I like it when those guys say I own it (disclosure), and I recommend it. :funn:Meaning buy it so the price increases and I can sell it, before I tell you to sell it. I guess it is a Catch 22 for them. If they recommend it without owning it, we would question why they don't put their money where there mouth is.

Soon after the 2000 Market Meltdown, NASD enacted rules that required pundits to disclose if they hold the stock of which they speak/pitch/dump-on.


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[goofer]

Momentum investing is only for pros who monitor the market each and everyday. For the avg investor it is a recipe to lose. My investing philosophy is to buy great companies when they are in a corrective mode or out of favor, or if they are temporarily mis-priced or misunderstood. My definition of great companies have names like General Electric, Pfizer, Johnson and Johnson, Proctor and Gamble, Chevron, British Petroleum, Bank of America, Chubb, Hershey, Lowes, Dow Chemical. There are many others.
An investor has to assess his tolerance for risk and his investment goals. My goal at this stage of my life is preservation of capital , predictable growth, blue chip companies that have a history of raising dividends every year, and as Morning Stars says " companies with a wide moat ". Anotherwords, high barriers of entry. My goal with my equity investments is 10% annually including dividends. There is a whole host of internet sites offering really good research. One place to start is with Standard and Poor's 4 and 5 star portfolios. Patience and point of entry is very critical for successful investing. It is a marathon not a sprint. Success and riches, whether in stocks or real estate, is buying when these assets are unloved. That is the case with real estate now.