Stock market?

[Apokalipse]

Insider information isn't always good though. At Circuit City we were all told by 'corporate' that there were 2 buyers and it was just a matter of how much money/time we'd get, and over the weekend we found out that we were being liquidated. So always take insider information with a grain of salt and don't put all your money on that info.

Yes, exactly.
The "hot tips" given out by people are often exactly the opposite of what's good for you.

Institutions who buy and sell lots of shares will often get spokesmen to tell the public that "now is a good time to buy, the shares are going up".
Of course, the institutions then go and sell the shares to the public at that high price, which then leaves them to drop.

In your example, the people who gave you that "tip" were probably just looking for people to take the shares off their hands, to leave the losses to somebody else.


See, one thing about charts of share prices, is that they do not, ever, tell you where the shares are going. They are only a record of where the shares have gone.
If you see an upward trend, it means there has been an upward trend. It doesn't mean that trend is going to continue.

 

[Pyrothrillah]

This is very true. Not that I am saying base your decision on insder information only. If you wanted to invest in to a company and you've viewed their earnings for the past few quarters, read about any upcoming events or work they might have planned and think it's in the best intrest of the company, then you have some solid information.

There are plenty of calculations as well involving P/E ratio's and so on and so forth. I could talk all day about things you CAN do to better you're knowledge and understanding of the company you are investing in, but at the end of the day you never know, but will be better prepared.

In Circuit City's case, who didn't see them falling? I mean really you have:

Best buy - better prices for the most part, number one in electronic sales.
Walmart - store mafia, second in electronics sales with a section probably big as half my home.

 

[Apokalipse]

This is very true. Not that I am saying base your decision on insder information only. If you wanted to invest in to a company and you've viewed their earnings for the past few quarters, read about any upcoming events or work they might have planned and think it's in the best intrest of the company, then you have some solid information.

Even if you get all of your information 100% right, you're always going to have losing trades. Shares can and do do things you don't expect. Unexpected events happen. You can't predict the future.

A good trader will get maybe 60% of his trades right.
You can hope for the best, but ultimately, you should also plan for the worst. Because the worst can and does happen.

 

[Pyrothrillah]

Totally agree. But if I am going to lose money, I'd rather have my ducks in a row than listen to Mi Maw's half-brother's nephew thinking he knows the ultimate pick.

 

[Apokalipse]

Or you could engineer your trades in a manner such that it's only possible to lose a relatively small amount.
You can do that with options.

 

[Pyrothrillah]

I like to think I'm not going to lose.

I've been financially safe so far, lost thirty bucks on Joe Blow's advice. Everything else has been great.

Options are very safe as well, for the most part. I wouldn't buy them at this point in the economy because of it's state of stability.

 

[Apokalipse]

I would only use options at this point, because of the state of the economy.
You can use options to make trades that have much lower potential for loss than shares.

Though obviously, you'd avoid selling naked options under any circumstances (because that gives you a really large potential loss)

 

[Pyrothrillah]

Well, the lost cost buys of the shares are great, but while you're in the waiting period and can't sell...

 

[Apokalipse]

Well, the lost cost buys of the shares are great, but while you're in the waiting period and can't sell...

If you own options, you can excercise them and force the trade to close.

 

[Pyrothrillah]

And then you spent too much time with your company's options, when you could have had other options of investment.

I see what you're saying and fully understand.

Til this day I live by the fact, "To Each His Own".