October 27, 2021, 12:02 pm EDT
Falling Stars
Once shining stars at their IPO moment a few weeks/months ago, they are falling down badly today.
Cryptocurrency ETF (BITO) -5% and Robinhood (HOOD) -9% are both below their IPO prices for the new low level. It is a reminder for those who rush in these stocks that high volatility carries extreme risks. Also, pure speculation on trading without knowing fundamental and market conditions are formulas to lose money quickly. Not only we do not get into day trading like Gamestop (GME), AMC Entertainments Holdings (AMC), but we do not touch cryptocurrency for trading or investment also.
Our investment style is on stocks that can run up for weeks, months, or even years for a steady return +20%, +30%, or +50% higher profits.
Many naive market participants want to get rich quickly so they are looking for high volatility and following rumors or speculation to trade IPO stocks, options, MEME Reddit social media stocks, penny stocks. It could an exciting moment when making money but over a longer period of time, the losses will swallow all their gains and capital.
Just do the math. Making +2% profit in a month equals +24% return in a year. +3% profits per month mean +36% annual return. If anyone can make such +24% or a +36% return consistently for 10 years, he or she would become the best investor ever by beating Warren Buffet or anyone known by wall street. Because the accumulated compound return is 7 times (700%) or 21 times (2100%) return for the 10 years period.
Therefore, we are working on three factors: fundamental analysis, news analysis, and technical analysis together to identify watch lists and portfolio members. By doing so, we do hope to find out more rising stars and avoid falling stars.
