Back when I was a pleb, I rode a stock from $45 to $2. It was during the dot bomb burst and those types of occurrences were in abundance. The original thesis behind the trade was a “chart, breakout, above some homosexual neckline.” This fucking stock– single handedly– destroyed my business and blew up my personal account beyond repair.
It threw my career into a tailspin and sullied my reputation at the firm. My production levels plunged from $100k per month to $20k, aka an ordinary Joe on Wall Street. Truth be told, if you’re not banking $500k on Wall, you’re wasting your time. Get to work.
Back to my catastrophe. I allowed a “technical” trade become fundamental. Then I convinced myself not to sell because “it was already too cheap.” Well, the cheap got cheaper, then it got perverse. The same could be said about those who chased coal down the sewer pipe.
How do you avoid such things?
The answer is simple: don’t buy stocks in industries under duress.
My blow up occurred in tech. Back then, their balance sheets were impaired and credit got tight, real tight, at the very worst time. Fast forward to today, coal, natural gas, alternative energy, solar and steel are all under pressure. Before buying a stock, know the balance sheet and avoid any name that might have an issue raising money.
Sure, CLF looks attractive and the stock is “real cheap.” But their business is intertwined with the very worst global de-growth has to offer. With a market trading at 13x, you have no excuses for chasing shit down the rabbit hole. There are countless names, trading at reasonable valuations, worth investment. Also, I tend to avoid names that have fucked up earnings reports, like FIO, DELL, HPQ.
Why gamble on a loser, when there are fucking winners out there? An analogy of sorts for iBankCoin versus the competition.
BONUS: Top 15 technically ranked stocks by The PPT.
39 Responses to The Best Trade is Always the Avoided One
Good points! With that being said (re: nat gas), any thoughts on $LNG, $CLNE and $WPRT? I think they have potential to be good ‘investments’.
no opinion on them.
I am attracted to losers.
Shouldn’t it be natural for a BearXXX?
Great Post Dr. Fly.
If someone pointed a gun to your head and said the SPX is going to rally 65 points by the end of the month, what 3 stocks would you buy?
I mean guaranteed to have a big move while the SPX moves.
The answer is very simple. I’d screen for the stocks that have outperformed all others during previous rallies.
I’d buy TEX, MTW, EXK
Broadcom back in the day for me.. I bought at 25 rode to 300 and sold at 30..Damn
Nortel and JDS Uniphase for me…
HOWEVER, those stocks are nuts.
These posts are the best.
Good advice. But at some point there shall be some real nice deals available. PCX will spark a panic in these related names… surely there will be some survivors that could turn into quick doubles when everyone realizes they are not all going under.
Trick is trying to catch that sharp knife and keeping all ten fingers intact in the process.
I see you have a degenerate mind. There is no reason to play in the tar pits, when the sky is raining fire.
Dude. Please replace a certain someone on TV.
No thanks. This is as public as I’d like to get.
Look at my YELP for example: that fucker just booked 100% in one month without the specter of imminent bankruptcy looming.
There is risk and then there is degeneracy OTB guy shit.
“just booked 100% gains…”
Did u sell out entirely?
Nice post ….
“The answer is simple: don’t buy stocks in industries under duress.”
Beeen getting assraped being short CNX but I refused to cover because their balance sheet is horrendous.
Hoping today’s news turns that trade back in my direction.
What am I missing? CNX appears to have a great balance sheet.
Brent not collapsing due to Norwegian socialists may have led to a fake bid in the tape today. Euro has a pox ridden blanket handout look tonight.
Nice post, thanks for sharing. Champions remember the losses more than the wins. Winning is a habit. I can’t believe The Fly was once a pleb? I can’t believe it’s not butter!
Buyers get trapped in industry under duress. CLF looks real cheap, but yo at thirteen X? They just chasing rabbits. My winners are countless. Run 500k like a daily habit. Ordinary Joes talk shit, but I got to drop them. Analogy on how iBC help me got Win. And we running the show, they just caught wind. Keep buying de-growth and throw your cock in wind (with rocks)
inspired by this post
“Buyers get trapped in industry under duress. CLF looks real cheap, but yo at thirteen X? They just chasing rabbits. My winners are countless. Run 500k like a daily habit. Ordinary Joes talk shit, but I got to drop them. Analogy on how iBC help me got Win. And we running the show, they just caught wind. Keep buying de-growth and throw your cock in wind (with rocks)”
….and in the kings english, that means…what?
Many gamblers rode LDK, FSLR and TSL all the way up then back down during the solar bubble.
But it isn’t just sector. It amazes me how many seemingly intelligent investors don’t seem to understand that many stocks are just a worthless ticker symbol to pump and dump. AAPL, GE, IBM, BA don’t come along very often. Most of the “fast money” momo, garbage stocks out there like NFLX, GMCR and LULU will be bought out or bankrupt or trading on the pink sheets in 10 years.
Best advice I have read in a long time… more of these and less of those “I am great you all suck” posts would be appreciated
It is necessary that I properly chastise those who had the nerve to question me. Very soon, the chastising will be over and I will get back to bowling on the markets.
It’s all part of the plan.
I wish I was following the market since 2000, it is really amazing how this pattern is following itself over and over again…I just need to figure out at what point the clams stop and what finally does them in. BTW, German court is hearing arguements tonight over the ESM, the ruling comes out at the end of the month.
also, fwiw, Norway Oil Strike ends, Brent should continue to fade.
“Overall today looked like a consolidation day before the market’s next move. Naturally, with the market in an uptrend, we expect the next move to be higher. Once the SPX clears 1358 it should be on its way. However, after reviewing a few technicals we would like to see the SPX hold above 1339. Should it break this level then there could be more downside ahead.”
Target = SPX 1475-1500
Tea, I have my own system which I watch the Advance/Decline volume of the NYSE for direction..fwiw, this is my take on tomorrow moves and the SPX levels I am watching..
rading_For our SPX on the daily multi month, 1359.89 is resistance and 1342.21 is still support, with minor support at 1339.03…if that is gone, we should free fall to 1285.81 ish.
For Tomorrow, it could be a game changer, NYSE advance-decline volume is heading towards the zero point which the upside bias could move to downside bias. Today we need a test of support at a mere -217,000,000 of advance-decline volume. Resistance is a very hard 603,000,000. Looks like a downside test for the market..and we could get some real room to the downside if we break that support
Target 575-1020 SPX
Monday, July 9, 2012
Due to a recent emergency involving Russell R. Wasendorf, Sr., a suicide attempt, some accounting irregularities are being investigated regarding company accounts. PFGBEST is wholly owned by Mr. Wasendorf. Therefore, the NFA and other officials have put all funds on hold, and PFGBEST is in liquidation-only status with our clearing FCM. What this means is no customers are able to trade except to liquidate positions. Until further notice, PFGBEST is not authorized to release any funds. We will update you as any new procedures are stipulated and with any further information as it becomes available.
Wasendorf appeared as chipper and dapper a gentleman as one would suppose of someone with his stature back in April.
Hard to believe the news lines.
There’s much more to this story.
good stuff, flea
Ah the good old days…lol
Been there done that…
The god damn German Constitutional Court will consider whether Europe’s new bailout plan and budget rules are compatible with national law in a process influencing not just how to tackle the euro zone debt crisis…if these humulus lupulus drinking dicktards find it un-constitutional i’ll go there myself and karate chop their beards in half…