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.
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Read it??? I LIVE IT!!! slowly but surely I am learning. Thanks FLY!!
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.
Quite the sell-off in IMMR! Loading up with more?
Not buying today. Mean reversals tend to stick. I sold a bunch before earnings and will buy back if the dip becomes attractive.
stopped out..have a new order in at 14.50
Stock will most likely consolidate before the next leg up.
if I get filled at 14.50 this will be a very nice day
what level appeals to you?
This stock action is totally insane!
bought back at 14.50 and 13.81
RAD RAD RAD RAD RAD …good shabbas, goyim.
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)
1000% correct. Success begets success.
Great post Master Fly.
And stocks that seem too low will go lower.
How do you a picture in the avatar box?
I was in nflx at 60 and sold too soon.
Gravatar to make avatar
lol gotcha
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.
What’s Lé Fly YTD?
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.
damn ONVO, IMMR and OPEN.
Happens
Goodie, I get to buy more IMMR next week.
with you SIR.
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.)
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.
XON next Friday intersting as well.
I’m Le Fly. I am Fast Money. ( No Guy Adami ).
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!
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
Option premiums are always jacked way up before earnings.
Could be the calm. Before the clam. The new permanent pricing of no risk.
You are brilliant, inspirational, giving, and deserving. Thank you for your intellectual contribution to my life.
damn,,sure are a lot of suck ups here..really getting metro-sexual on this stream
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/
In fairness, the deer was rocking a hoodie.
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).
biotech was the way to go this year…and still is..FDA is onboard
Fly, you win a lot, like Robert Mugabe.