Plunge and crash are not favorite words of mine. They are on par with ‘pivot’.
They are thrown around too often. But, when they do happen, plunges, crashes and pivots create huge shifts in wealth.
For the past few weeks I have been as negative on the markets since January 2008. Last night I was on Stocktwits stream and wondering why we had not ‘crashed’ yet. I am not short, in fact I am mega long startups and the web economy. But, I am very light on stocks. Considering the massive runs in $AAPL and $AMZN, there has been no correction yet for my portfolio of stocks. I really wanted to short stocks throughout the day, and the community gave me plenty of ideas (would have been winners), but I just am enjoying my recent wins and focusing on the Stocktwits product and community.
Shakespeare is overrated, but I have a favorite quote from Shakespeare that somehow summarizes my attitude towards the market:
I always feel happy, You know why? Because I don’t expect anything from anyone, Expectations always hurt
Change “expect” with “hope” and “expectations with “hopes” and you have a market wisdom to live by.
I always feel happy. You know why? Because I don’t hope for any of my stocks. Hopes always hurt.
I try to stay longer with the stocks that make me happy – the stocks that make me money. I try to kick the stocks that make me sad – the ones that lose me money. I don’t expect to catch big winners every time. I definitively expect to be wrong on some occasions, but I always know how much a I have at risk and so should you. Never let one trade decide your destiny.
Market crashes happen. They have always happened and they will always happen. On days like today, if you are not playing golf (I took a few hours off for lunch and tennis with Rachel), it is better just to sit and immerse yourself in the wisdom of the StockTwits’ stream. Today I was blown away by the awesome ideas flowing through Stocktwits. When I was first blown away by a website – TheStreet.com’ – I was hooked. The writing and intensity was off the charts. Cramer seemed like a wizard. The problem was I felt like an outsider. There was two communities….those inside TheStreet.com and those reading it. No comments, no interaction, just us and them.
Not anymore.
Believe me, you will learn a lot about trading by watching people’s real time comments and pondering about fear, greed and hope.
You will learn to recognize capitulation (not sure if we’re there yet):
vader7x
in general, humans are procrastinators. they’ll wait for the last minute to sell $$
vader7x
2 types of bottoms: V shaped (capitulation) and rounding (long period of flat before moving upwards) $$
nelderini
$$ Capitulation: I gave up on all my longs today, save PMs, both gainers and one hard loss. Therefore the market will rally hard immediately
You will learn to be level headed and ask the right questions when most people around you panic:
enuresis: $CRASH good idea for stocktwits community to come up with best stocks for rebound when market eventually turns around.
You will quickly get links and learn perspective…like ‘How bad was Today’?
You will learn to ignore noise and rumors:
TradeIdeas1: $$ Expect more volatility and bs rumors of more bailouts. It’s not going to happen but will stretch the rubber band hard
You will learn to respect risk:
jfahmy: If this is another leg down, it could be swift & brutal. We could take out the August lows quickly. Use caution & don’t be a hero $$
StockSage1: Today is an example of why a trader must always use stops, many stocks told you yesterday to be in cash or very light heading into today $$
You will laugh (at yourself or other people):
vader7x: You’ll know its a bottom when $GRPN starts having deals for banks
toddstrade: Martin Armstrong; “Socialism works until you run out of other people’s money” $$
GiveMeGrowth: Blood Bath and Beyond! $BBBY
If you want to learn French…go to France.
If you want to learn how to be an entrepreneur, go work at a startup. Find one you love and just show up like Costanza. Lock yourself inside, find the hardest job and just do it until you get noticed.
If you want to learn how to invest and trade your hard earned money, pop out the ‘All’ stream and the ‘Suggested’ stream on Stocktwits and leave them open in the corner of your monitor all day. You will be immersed in the language of the markets in a short time.
And then if you still want to learn more about market crashes and what to do, read:
MktAnthropology: The EKG of a Crash – 2011/1987 Analog – Chart Lab
StockTwits: Football Season Also Marks Stock Market Crash Season via @allstarcharts $CRASH
reformedbroker: CRASH TEST DUMMIES
ritholtz: What Should Investors Do NOW ?
wanted to install the stocktwitz app for fb but requires me to authorize the app communicating in my name? so brutal
Yep. Sorry
We will connect with anybeat
lots of app do that. i don’t care much about it
What’s wrong with the word pivot?
its thrown aroound too often…pivots are extremely important and special events and a re rare to pull off for entrepreneurs
Howard, you missed my best line of the week…
“500 points? Nah, that’s a bad day only. Limit-down gaps for days running. That’s a crash”
…that’s what i get for leaving out the $$ on a Twits masterpiece ;)
Good post as always. “Blessed are they who expect nothing for they shall never be disappointed”. Good to be on this stteam during markets like the one we have now.
I really don’t think Shakespeare ever wrote that.
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Behind the expensive suits and the talking heads and the constant reassurances there is a simple truth. The Stock Market is and has always been a suckers game!
Consider the following:
1. The S&P 500 is a big barrel of money. When the money gets to a certain level, the Psychopaths drain it off. In order to get it to a certain level, you have to buy the B.S. and turn your life savings over to them.
2. Only a few insiders actually buy and sell stocks. These institutional investors and market makers bring the market down by selling stock into the market.
3. The S&P 500 represents 75 cents of every dollar invested in the stock market. That means 500 company stocks to sell when they want the market to crash. Not that hard to accomplish when you think about it.
4. The other branch of the Satanic Psychopaths catch all that falling money buy buying Put Options against the S&P. AS the S&P goes down, they are capturing all of that lost wealth.
5. My Clients have made anywhere from 20-50% returns over the last week by also shorting the stock market. One client made $2400 profit from a $3500 investment. Can your stock broker do that? If so, why aren’t they doing it? Instead, they are standing idly by while you lose money! http://www.moneyteachers.org/Stock+Market+For+Suckers.htm