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发表于 2010-5-25 08:57 AM
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Friday, May 21, 2010
Another Bad "Expert" Advice Story
In August 1998, I appeared on the Cavuto Business Show on The Fox News Network along with another guest. I was bearish on the market and pointed out to Neal Cavuto the similarities to October 19, 1987, (the day the Dow Jones Industrials dropped 508 points, otherwise known as “Black Monday”).
When Neal asked the other guest, “What are you buying here?” he answered, “We’re buying the stocks that have dropped the most.” This was on Friday, August 28, 1998, and coincidentally, the following Monday, August 31, 1998, the Dow dropped 512 points, suffering one of the worst one-day price declines in stock market history.
I suppose for my fellow guest, the 512 point market crash resulted in even more opportunities to buy stocks that went down the most?
After a sharp decline, some stocks can have short-term bounces or rallies; however, in my experience few stocks bottom out when you expect them to do so. And, even if they do bottom, often they simply move sideways for an extended period, wasting valuable time. There are periods in the market when the reward to aggravation ratio is just not worth your valuable time and capital.
If you’re looking to find the next big market winners—the market leaders—then you want to keep your eyes peeled for the stocks that hold up the best (not the worst) during a market decline, and then buy them as they emerge from the market’s wreckage and move into new high ground. This will occur AFTER the stock's price undergoes a consolidation period of several weeks or more.
As in any profession, there are only a small number of truly outstanding practitioners, whether a doctor, lawyer, baseball player, poker player or investment pro. Don’t think that just because someone is an “expert” or they’re on TV it means they’re outstanding or even know what they’re doing very well.
Pros make huge, costly mistakes and often give terrible advice. More importantly, just because some “pro” does something stupid (like buy the stocks that went down the most right into a decline), it doesn’t mean you have to. Be smart. Develop a solid, sensible plan and adhere to it. By doing so, you can outperform most of these so-called “experts.”
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Mark Minervini |
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