Recently, these stock/company names have come up rather frequently due to either massive speculation about its future or a coordinated price manipulation effort. The reason why it has attracted so much attention is that it has made many people really rich very quickly. However, the back story is again much more complicated than that. As an investor, you can call me frustrated or maybe even jealous if I did not benefit from those massive price rallies. However, I think gains that come from such means are nothing more than winning a lottery. In this week’s post, I will share some personal views on these rare occurrences and why I choose to ignore these “opportunities” as much as possible.
Speculation is for gamblers not investors
It sounds very much like sour grape-ing cause I would gladly receive the gains from any of those insane rallies in the past week. Who will be against free money? Well, definitely not me. That said, I would like to express the difficulties experienced on a day to day basis as an investor and trader. The planning that we do to upkeep with the market and our individual stock counters require quite a bit of monitoring. It will not do us any good if we had to add an additional “risk-off” counter to our list of stocks. Therefore when such “news” comes up every once in a while, I guess it does derail us for more than a few instances but after all, it’s akin to winning a rigged lottery.
What if you were wrong?
Actually, there are fairly liquid penny stocks in the market as well that rally quite a bit on a daily basis. Hence there are “alternatives” when it comes to such bets. At the end of the day, the only real incentives to bet or gamble are mainly for the thrill or for a sizeable quick buck. So before you follow the crowd and throw your hard-earned capital into these activities, remind yourself if you are still investing in a legitimate business or just betting because of some leaked info or tip. If you admit that you aren’t gambling then please do no associate these yields to investing. What you are indirectly doing is in fact derailing legitimate investors, especially novice ones, from their long-term goals.
Gains are relative to the amount of capital vested (much more than yield)
Yes, it might have gotten you a few hundred percent yields, but how much you are willing to risk matters way more than that. In other words, never fascinate about potential gains when such rare occurrences happen, because, at that time when you punch in that order, your mental psyche will be way different than after the fact. Lastly, every drastic price movement in stocks might always go both ways, it might also dip before rallying hence there is a huge chance that you entered too early and bailed before it climbed. To that I say, it is really not worth it.
Closing thoughts
I believe I have made myself abundantly clear that I am indeed interested in the free money from such windfall trades if I have made one. But will I do it even if I knew beforehand? No. Moreover than just the risk of speculation, your investment mentality and philosophy will also take a severe hit. So what I am trying to say is, if it happened for you, I really hope it is a coincidence because I do not really see any real benefits waiting for the second or third rabbit to bang its head on the tree. 守株待兔.
