Australian (ASX) Stock Market Forum

Market Myths

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No1: Stock ABC has gone up so many %, and its already run so far, surely now its expensive and cant run anymore

No2: Stock XYZ has fallen so many %, its looking damn bloody cheap, surely it cant fall anymore

These TWO are very common myths. I have seen this attitude (no1) with ZFX and more recently with NXS, by people on this board, so i think there is a need to highlight the fact that these are MYTHS. I would rather buy a stock at all time highs than all time highs. Always consider MOMENTUM.

Any1 else know anymore myths?
 

MichaelD

Not fooled by randomness
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No3: It's a good company. (In response to a plunging share price.)
No4: Leave some profit on the table for someone else (to explain taking a profit early.)
 

tech/a

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nizar said:
No1: Stock ABC has gone up so many %, and its already run so far, surely now its expensive and cant run anymore

No2: Stock XYZ has fallen so many %, its looking damn bloody cheap, surely it cant fall anymore

These TWO are very common myths. I have seen this attitude (no1) with ZFX and more recently with NXS, by people on this board, so i think there is a need to highlight the fact that these are MYTHS. I would rather buy a stock at all time highs than all time highs. Always consider MOMENTUM.

Any1 else know anymore myths?

Nizar.

Your myths are often facts in short timeframes.
But in general terms it CAN be a correct observation.

I like.
You cant go broke taking a profit.
 

chops_a_must

Printing My Own Money
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nizar said:
I would rather buy a stock at all time highs than all time highs.
Huh? I'm assuming you made a mistake here. What did you mean to say?
 

TraderPro

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nizar said:
No1: Stock ABC has gone up so many %, and its already run so far, surely now its expensive and cant run anymore

No2: Stock XYZ has fallen so many %, its looking damn bloody cheap, surely it cant fall anymore

These TWO are very common myths. I have seen this attitude (no1) with ZFX and more recently with NXS, by people on this board, so i think there is a need to highlight the fact that these are MYTHS. I would rather buy a stock at all time highs than all time highs. Always consider MOMENTUM.

Any1 else know anymore myths?
Yeah, these myths can be absolutely true... but when we look at the stock today, we can never know (well we can make an educated guess) what it would do tomorrow.

There are companies that just keep going higher and higher there are companies that crash and recover and those who crash to never return again...

It all depends on your view, your perspective about your trading.

I do know one thing - if you have a gut feeling to sell (even if you follow a system) - just sell it with no regrets. Even if it keeps going higher and higher - just feel that you got out when you felt it was safe to go out. If it falls - just feel relieved that you listened to your gut.
 
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TraderPro said:
Yeah, these myths can be absolutely true... but when we look at the stock today, we can never know .
Obviously.
But id rather buy a stock in a clear uptrend than a downtrend.
That was my point.
 
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I judge by measuring short and long term moving averages. However, i have discovered that buying at the peak is not a good investment regardless of any statistic or chart analysis. Most shares have gone sideways over the last few years and under valued shares have trended upwards. Who would have predicted Qantas jumping 24% in the peak of an oil prices!!!

You have banks making 3 billion profit and selling for $30 per share (roughly.) And yet Maquarie Bank makes only $750 million profit and yet it is valued at $75. Go figure... non of it makes sense to me. Either Maquarie is overvalued or the banks are undervalued.
 
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ts2000 said:
You have banks making 3 billion profit and selling for $30 per share (roughly.) And yet Maquarie Bank makes only $750 million profit and yet it is valued at $75. Go figure... non of it makes sense to me. Either Maquarie is overvalued or the banks are undervalued.
Or either you are comparing share prices instead of comparing market caps.
MacBack market cap is around i think $15million. CBA 50+, and the others between 25-50million.

And then MBL trades on a higher earnings multiple. Why? Because of its outstanding ability to continually grow their earnings at a much faster rate than, say, your 11%eps growth of ANZ bank. Their business is more diversified and more global in its nature. I think its great how theyve continued to milk "management" fees from its satellite funds. MacBank pioneered this and now BNB is copying. As they say, imitation is the most sincerest form of flattery.

Share price means nothing.
 
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