Re: Shorting observation
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By contrast, most stocks which are currently low and are going high in the future are not in the news, they're not anywhere in the media. On the other hand, most stocks which are currently high and are going low probably are already in the media.
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What about Starbucks? It starts high and just goes higher. While I agree that its easier to see overhyped stocks than underhyped ones, even IF you are "right", its a question of WHEN you will be proven correct, and how much you will lose before the stock crashes. I assume your OP is motivated by the recent Internet bubble; you saw all the steaming crap which was selling like hotcakes. You could just short that and make a killing no? However, how do you know the stock won't double, triple or worse before the stock finally falls as it is supposed to? As a common saying regarding the efficient market hypothesis states, "A market (or stock) can be inefficient far longer than you can be solvent."
You might have an uncanny ability to detect what is just overhyped crap, but who says that the hype won't push the stock up another 30, 40, 50 points before it crashes as you had predicted?
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Agree with you on all counts. Yes, it is mostly internet/technology stocks that my bullshit detectors are pretty decent for. You also correctly point out that even though I - and many people - did strongly suspect a lot of the crap-outs that did finally occur, it did persist and climb for quite some time anyway.
In any case, I know there are no easy rules or guidelines, just throwing out some thoughts. Thanks for your insights.
eastbay
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