Hello friends, in today’s article we see the 12 different silliest things people say about stock prices. Peter Lynch gives the 12 silliest things people say about the stock prices in chapter 18 of one up on wall street. So let’s see one up one
- If it has gone down this much already, it can’t go much lower: About this thought peter lynch gives one example, one stock has the price of 30 when at buying time, and they go down and come to $13 dollar, So peter lynch things not go more than that means below $10. But that stock is going down up to $4. So thinking like the above though it doesn’t make any sense to the stock price or investment.
- people can always tell when a stock has hit bottom: For this thought author says, “Don’t try to catch knife, when they are falling, if you want to catch the knife, first you have to do is that knife come to the ground and they settle on the ground, then catch the knife.” So so many people just assume that they know the fall of stock prices and for that, they make the Short selling and get the maximum losses when the stock goes up. So don’t try to catch the knife, when they are falling. So you have to be patience in buying you stock that you are analyzing. (The 12 Silliest things people says about stock prices)
- If it has gone this high already, how can it possibly go higher than this: So many people just think like that “this stock is double and there is the growth cycle is ended and I don’t think so this stock is a little beat higher than this.” So if you are also thinking like that you can’t make the maximum money in that stock. The most probability is that you most of the time miss the multi-bagger stock. So don’t think like that, if you want to sell the stock then ask yourself, why are you buying this stock (initial main reason), or fundamental is weak.
- It’s only $3 a share, what can I lose?: The price of a stock in a falling situation doesn’t matter, whatever the price of the stock is $1000, $500, or $3. If they go zero dollars then that doesn’t make any sense. So don’t think like that. So you lose then you have remembered there is also the zero number that you lose, then whatever that price is go higher in multiple of that is go zero again, so zero is also chance to you lose. (The 12 Silliest things people says about stock prices)
- Eventually, they always come back? Most of the time people think that whatever the price of the stock is go down then will come back. So for this author says, there is no guarantee is that this price of stock comes back. So hoping this and waiting for the stock to go up is like wasting your time (money). So Don’t think like that, and see the possibility of coming again at the right position price.
- It always the darkest before down: People think buying the stock and that stock is not growing, then people say this though, But it does not make any sense and staying with that stock. So there is no guarantee of the stock is go up after some time. Thinking like this stock means you have to die financially with that stock. If the stock is falling badly, and you want to come to some point of price. then you have to think like that, if you lose the 99% in that stock so there is very little means no guarantee you will recover this. So this stock is never ever recovering up to 99%, and it’s impossible to tread near that stock price. So author gives the example of Oil company stock, they buy the stock at $4560 in 1981. and this stock comes up to $2200 in 1983, so people think that the bad or darkest time is gone and actually that stock is going up to $686 in 1985 so there is no guarantee of stock is always the darkest come first or after go, it may happen the darkest stay after also. (The 12 Silliest things people says about stock prices)
- When it rebounds to $10, I will sell: So this is not good to sell this stock at $100 means this does not make any sense with at stock. Or you sell at any arbitrary number. there are two possibilities of this thought is 1) if this can’t happen to that at an arbitrary number, and 2) If this happens then you can test the higher return after making above the $100 because you sell the first. So there is no sense of thinking like that.
- Conservative stock doesn’t fluctuate much: Most people are thinking about some conservative stock, for this author gives the example of the Utility company. this company is a conservative stock company, and they go down at 80% and you ignore that stock buy saying this thought. So you have tracked the performance of the stock of conservative also with the regular time frame.
- It’s taking too long for anything to happen ever: Most of the time the stock price remains the same and people say, it’s taking too much a long time to happen to anything in the company. If you think like that when you sell this stock, and most of the time next day’s stock price reaches high. for this author give the example of Merk company is a pharmaceutical company, this company stock remains same continuously in 9 years. And the earning is increasingly slowly means 14% annually. So the average stock price is the same, so peter lynch says, this stock of the company is very awesome, and the probability is that this stock can become the 3X, 5X, and 10 baggers in the next few months of in a year of one or two, so stay with this type of stock, without thinking above thought. (The 12 Silliest things people says about stock prices)
- look at all the money, I have lost because I didn’t buy it: This type situation come in much many time and people says, I didn’t buy that stock, I lose that much of money in that. So for this author give some explanation, he said,” So this is the human psychology, so you have to consider in this stock, you can’t put money, so you don’t get the lose of that, and be happy with whatever you have in your hand, and ignore the other people grow, that you can make the biggest money in the stock market.
- I missed that one, I will catch the next one: When Linux company IPO is coming, so many people are saying that this is next Microsoft and everyone is trying to buying only on this thought, is I missed that one Microsoft, I’ll catch the next one. So all know the result of Linux. So don’t think like that, so each and every stock of the company is different so don’t blame yourself. (The 12 Silliest things people says about stock prices)
- The stock has gone up, so i must be right or the stock has gone down, so i must be wrong: So don’t think like that, because short term investment not telling you a clear picture of your right or wrong. in short term this only happen is that how many people ready to buy that stock or how many people are not ready for buy that stock.
This is all about the 12 silliest things people say about the stock price from chapter 18 of one up on wall street book.