I haven’t written a blog post in a while, so here are a few thoughts going through my head right now:
1) I see so many angry bears out there. They argue EVERY DAY with such bitterness about the market grinding up. My advice to them is: “Don’t focus on what you THINK the market should be doing, focus on what it is ACTUALLY doing.” There’s tons of liquidity out there, STOP ARGUING WITH IT! You’ll just drive yourself crazy!
2) Stop trying to call a top based on every stupid little sentiment indicator. “Oh, my dog wants to buy Facebook…My Mom wants to buy a 10x leveraged ETF…My neighbor asked me about Apple.” Not every little thing is a sign of a top. Keep in mind that moves in the market go on much longer than we can ever expect. There were daytrading firms that did very well for years from 1997-2000 (yes, I know they eventually blew up, but they still did well for a long time).
3) Please stop calling 3-D printing a bubble. This sector is in its infancy stages. Yes, I realize the stocks will be volatile and some need time to build new technical bases, but it is WAY too early to call this a bubble.
4) Everyone has a different strategy. Some trade momentum, some short stocks, some play the mean reversion trade, etc. etc. While I respect all the strategies out there, don’t forget to KNOW WHEN YOUR STRATEGY WORKS. In other words, my strategy is a growth/momentum one. It works well in a market like the one we are in now, however, it doesn’t work in a bear/corrective market. Always be aware of the trading environment you are in and make the proper adjustments.
5) I realize this all ends bad…it always does. But I’m not going to sit on my hands and tremble with fear about it. When stocks stop working, price action becomes unhealthy, and distribution builds up, then I will listen to the market and raise cash. Again, there’s nothing wrong with taking some profits and being a little cautious at times, but arguing with healthy price action gets you nowhere.
I’ll conclude with one of my favorite quotes from Market Wizard Ed Seykota: “Win or lose, everybody gets what they want out of the market. Some people seem to like to lose, so they win by losing money.” This quote has a very deep meaning to me, but I’ll leave you to interpret it however you want. Good luck trading!