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Article rating : 0.00, 0 votes. Author : Al Thomas
Every day in any financial publication you will find the Wall Street mavens giving their predictions on many stocks. It was issued here and should go there. It is now undervalued and is worth that much more. Really?
Has anyone gone back to check out these
predictions? I haven’t, but I know that as a
stock increases in price these same geniuses
continue to raise their target prices. How they
arrive at these mysterious numbers is beyond me.
When their price target is reached do they ever
tell you to sell? Not that I can recall. And if
it starts down do you ever hear from them again.
Not hardly. They are now predicting some other
stock.
All this is done in loud voices and big
headlines. There are many reasons given as to
why XYZ will go to $230. And maybe it will, but
when it gets there (if it does) what do I do?
Not one of the Maul Street crowd ever tells you
to sell.
Price targets are like doing research.
Both are worthless as far as making money in the
stock market is concerned.
Here is the secret of how to make money
in one of those hot-shot stocks. First don’t pay
any attention to projected price by any broker.
They don’t know. All that talk is window dressing
to get you to buy. Remember there is someone
willing to sell to you at that price.
And second you should be selling out near
the top (not at the top). It is not that difficult
to do, but you won’t get this from your broker.
Since no one knows where the top is then you
have to let the market action tell you when to
take your profit. How? With a trailing stop loss
order.
Let’s say this hummer took off from $14
and it is now $35. WOW! Should you buy it? If the
public relations is new and you want to take a
chance then buy it, but have your exit strategy
in place. The media blitz for this stock says it
will go to $90 and sure enough it does, but it
keeps on going. It went right through its target
and is now in outer space above $150 and still
has rocket fuel to burn. Your trailing stop is
now somewhere about $125 to $135. This beauty
tops at $255 and plays around there for several
weeks when it starts down and hits your stop at
about $230. Aren’t you glad you didn’t sell at
$90?
The above stock will be nameless here, but
I did see this happen and it finally ended down at
$2.50. That is why buy and hold should not be in
your lexicon if you are an investor.
Price targets are there for the gullible
investors. Learn to use this Wall Street trick
to your advantage by using a trailing stop.
Copyright 2005
Al Thomas' best selling book, "If It Doesn't
Go Up, Don't Buy It!" has helped thousands
of people make money and keep their profits with
his simple 2-step method. Read the first chapter
to receive his market letter for 3 months at
www.mutualfundmagic.com to discover why he's
the man that Wall Street does not want you to
know.
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