Have you ever heard of the great paradox in the stock market? - Chasing Highs or Hunting Bottoms?
Welcome to Thursday Special!
In the midst of a two-week rebound in the stock market, numerous stocks have soared to historic highs, exemplified by $Microsoft(MSFT)$ reaching $373.13, $Wal-Mart(WMT)$ at $169.94, and $Broadcom(AVGO)$ breaking records at $981.75.
Whether you're a novice investor or a seasoned player in the market, a significant number of individual investors tend to favor buying stocks that have experienced a substantial pullback from their peak. This preference stems from the perception that seemingly cheaper stocks are safer or are closer to historical lows.
Many individuals express reluctance to invest in stocks that are currently reaching new price highs.
However, have you ever heard of the Great Paradox?
It is one of the great paradoxes of the stock market that what seems too high usually goes higher and what seems too low usually goes lower.
Speaking of "new highs," O'Neil introduces the concept of the "Great Paradox."
In O'Neil's framework, if a stock breaks out from a valid price adjustment pattern, accompanied by increased trading volume and approaches or achieves a new price high, it might actually signal a buying opportunity.
What's your take on this paradox? Do you prefer bottom-fishing or chasing highs?
Let's spill the tea on your investment strategies!🌈✨
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🌟🌟🌟Chasing Highs or Hunting The Bottoms imply knowing when the stocks will hit their all time highs or when they will hit their all time lows. Nobody, not even the experts can predict with any degree of accuracy unless perhaps if they have a crystal ball.
Perhaps a better way would be to dollar cost average through Tiger's awesome Auto Invest and that way, over time it will allow the magic of compounding to happen. It takes away the emotion and angst of when to buy or sell a stock and allow me to sleep easily at night.
Investing is after all a marathon, not a sprint!
@MillionaireTiger @TigerStars @TigerClub @Tiger_SG
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Great paradox - my take
Speaking of "new highs," O'Neil introduces the concept of the "Great Paradox."
In O'Neil's framework, if a stock breaks out from a valid price adjustment pattern, accompanied by increased trading volume and approaches or achieves a new price high, it might actually signal a buying opportunity.
my take (personal view) : It could be right if accompanied by other good method.
When i am buying any companies to diversify, it always failed me because once the price dropped it could not come back, why ? because not many demand on that stock, although the company is still stable, so i would rather buy the famous companies when it drops and started to move up. All those famous companies now are at the higher level. I wish i can buy more when at the bottom, but we never know where the bottom. Can catch some and diversify is already good enough for me.
It is difficult to time the market, when i think it will goes down again to buy back, it didn't happen. So now many famous companies i have not buy back again, waiting for pull back. So how to decide when to buy? If i think the price is good enough to reenter/add i will. I may not catch the bottom, i always do this for $Berkshire Hathaway(BRK.B)$ $Tesla Motors(TSLA)$ $Meta Platforms, Inc.(META)$ these 3 still giving me green.
Not investment advice, wish you the best 🙏
@MillionaireTiger
@Shyon @icycrystal @MHh @Bons @Mrzorro @Aqa @rL @SirBahamut @HelenJanet @GoodLife99 @pekss
Bottom fishing or chasing lows is a little time consuming for me and I don’t like the great paradox risk that it can and usually goes lower (for me that is), although I do buy penny stocks in valued sectors with some future ling-term potential. If they fail, I havent lost too much then. I bought a $Aurora Cannabis Inc(ACB)$ and another Cannabis penny stock recently due to it’s under $5 entry price.
談到“新高”，奧尼爾引入了“大悖論”的概念。
在奧尼爾的框架中，如果一隻股票突破了有效的價格調整模式，伴隨着交易量的增加，接近或達到新的價格高點，它實際上可能是一個買入機會的信號。
Buying low can get lower.
Buying high can get lower.
Likewise, buying low can get higher.
And buying high can get higher.
So there are 4 scenarios.
So how?
The key is to correctly choose the right company or strategy, and buy when the price is right.
Through value investing, price is just the offer, but the intrinsic value is what matters. Buying at a safe discount to intrinsic value matters most.
This is followed by buying an excellent company at fair value. And finally, through DCA of index.
What do you think?
@Bonta @daz88888888 @LMSunshine @melson @GoodLife99 @SirBahamut
[Grin]
The company i was following was Amazon and that must have been at least 6-8 years back when it broke a new 52 weeks high. Indeed, I was told by an analyst to buy in as this signals the beginning of a new uptrend. At that time, Amazon was considered expensive by many while it had also not turned a profit. The analyst I followed mentioned that Amazon could turn profitable at anytime of its choosing. It was just that it had chosen growth. I was intrigued by that idea but chasing after a 52 weeks high is just not in my DNA! I gave the idea a pass.
Fast forward to many years later, Amazon, as we all know, had continued to make many more new 52 weeks highs. Amazon also decided to report profits. It is as simple as that! I saw the profit made by that analyst on Amazon, at least a 8-bagger or 800%!
Long story short, never dismiss an idea, no matter how silly it might sound at that time.
Chasing bottoms creates new high these days heheh [Tongue] stock continues to surprise us indeed... I'm sitting on the sidelines till next year before I shopping for bargins... Currently recovery from this " EV downfall - yip i said it " [smile]
Cheers @MillionaireTiger
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