iBankCoin
18 years in Wall Street, left after finding out it was all horseshit. Founder/ Master and Commander: iBankCoin, finance news and commentary from the future.
Joined Nov 10, 2007
23,445 Blog Posts

HAVE A BITE

This isn’t rocket science. Every day some of you astound me with your impertinent stupidity. I am going to teach you the only lesson you will ever need to learn on Wall Street. Are you ready?

STOCKS AT NEW HIGHS TEND TO CONTINUE TO MAKE NEW HIGHS.

While it’s true, we all like to buy the underdog, in the hopes of catching lightening in a bottle: the 52 week high list is where the real money will be made. There’s a reason why those stocks aren’t at new 52 week highs: they suck.

YELP was at a new high when I bought it and now I am +40% in two days.

Stock prices are fueled by earnings. The earnings are extrapolated, taking the macro environment into account, and a multiple is affixed by investors. We are guided by analysts, who in large part are guided by us. They feed the mob what they like to eat.

When buying a stock at new highs, try to figure out what its earnings might be in a year, maybe two. Take a multiple or FPE that is average for its industry and set your price target. Naturally, this doesn’t apply to swing traders or the vagrant sort of day trader.

Price targets need to be justified, so the unwashed public can buy in. All too often these targets and rationale are ridiculous. Case in point: the dot com bubble. However, the gist of the dot com fervor was correct, was it not?

Look at AMZN, FB, YELP, Z, PCLN, AAPL, TRLA and the countless internet stocks killing it today.

Check your egos at the door when you come to play. This is a sport that requires dedication and focus. Learn from people who do it well and you will save yourself the agony of experiencing trial and error.

If you’re gonna do this, do it right. Read iBankCoin daily.

NOTE: I will be posting the iBankCoin logos that you submitted next week. If you want to create our logo and accomplish immortality, as well as a few hundred bucks, email it to me @ [email protected]. The winner will be decided by popular vote.

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40 comments

  1. Ray Donovan

    Read it??? I LIVE IT!!! slowly but surely I am learning. Thanks FLY!!

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  2. ctb007

    Thanks you for posting this. People do not understand that concept stocks making 52 week highs continuing to make new highs and stocks making 52 week lows continuing to make 52 week lows. Newton’s law of motion exists for a reason and in and out of the market.

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  3. mattjames83

    Quite the sell-off in IMMR! Loading up with more?

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  4. TheHarper

    RAD RAD RAD RAD RAD …good shabbas, goyim.

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  5. Jules

    Fly is there a reason why you stayed away from LNKD or NFLX, those two stocks seem right up your alley. (My apologies if you were involved with the two, I’ve only been reading your blog religiously since the winter past)

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  6. Geoff Garbacz

    1000% correct. Success begets success.

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  7. 4fl3x

    Great post Master Fly.

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  8. Cascadian

    And stocks that seem too low will go lower.

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  9. Jules

    How do you a picture in the avatar box?

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  10. The Fly

    I was in nflx at 60 and sold too soon.

    Gravatar to make avatar

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  11. Bullish

    Everybody I’ve talked to lately believes once we hit all time highs, we will certainly reach all time lows soon after. But they are stupid so who cares what they think.

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  12. Captain Ahab

    What’s Lé Fly YTD?

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  13. Dale

    Impressive, Mr. Fly. But, I’m a wine drinker and a Chess player, so my equity allegiance has been set. But it is clear. You are a BAD MF. Great Stuff.

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  14. ripper

    damn ONVO, IMMR and OPEN.

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  15. The Fly

    Goodie, I get to buy more IMMR next week.

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  16. surplus_drones

    Very true.

    Also lets keep in mind the following factors.

    1.) 40 billion of asset purchases a month from the fed. Some of this money finds its way to the market via TBTF’s purchasing stock. Reducing the float of any given issue.

    2.) Pension funds, mutual funds, institutional investors, and 401k managers chase performance. Some of these entities are required by law to put money to work every month or quarter etc..

    Example: An employers 401K plan that matches an employees monetary contribution with a stock match. Many times the stock itself comes from options that are purchased by the company. (Calls) The options are then exercised. Thus, the stock gets called away from the entity that sold the calls and the stock is in essence pulled out of the existing float that is currently up for sale.

    Many employees never sell stock or actively manage their portfolio for a multitude of reasons. Many 401Ks become grossly overweight with the stock of the employees parent company. (still today.)

    This has an effect of reducing the float of a particular issue that comes up for sale. Thus, having an effect of decreasing selling pressure. A stock price simply rises when there are more folks looking to buy than to sell. The ask then gets lifted from available sellers because they want to sell stock for more money (market makers, HFT, anyone selling stock or that has stock inventory.)

    This can contribute to the ask increasing and the bid having to follow. A chase if you will and thus a continual rise in price. (Unless of course there is a secondary offering.)

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  17. snoozemr

    ONTX rips 8% all in the last hour. IPOs are just sick this yr. i think UCP is the next to rip up. prolly won’t play any new issues until FI next friday. SFM yesterday was insane.

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  18. tradingmantis

    I’m Le Fly. I am Fast Money. ( No Guy Adami ).

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  19. Coach

    Hell I was out golfing this morning and took a quick look at IMMR up 16% at one point! What a firkin disappointment to see it down after a fantastic earnings report! I gotta say, I don’t like the action today on IMMR, it doesn’t make sense!

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  20. Helkel

    Where has the vol-o-tility gone. Just up up and up. My earnings option plays are sucking me dry, moves are too small, options too pricey. Time to regroup & re-
    Get a new plan

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    • lol

      Option premiums are always jacked way up before earnings.

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    • fake amish

      Could be the calm. Before the clam. The new permanent pricing of no risk.

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  21. Rob I

    You are brilliant, inspirational, giving, and deserving. Thank you for your intellectual contribution to my life.

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    • gatorsun

      damn,,sure are a lot of suck ups here..really getting metro-sexual on this stream

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  22. lol

    Attention everyone…
    You are safe… Bambi has been destroyed, you can sleep easy (/sarcasm)

    http://www.wnd.com/2013/08/armed-agents-kill-harmless-baby-deer-in-raid/

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  23. fake amish

    As the future generation of peeps live at home doing some part time work “would you like fries with that” if they can get it. Being a student as an occupation leaves little time. One must give the boomers the respect they deserve. Beyond fucking well played(bows and retreats).

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  24. slugbait

    biotech was the way to go this year…and still is..FDA is onboard

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  25. Just An Observation
    Just An Observation

    Fly, you win a lot, like Robert Mugabe.

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