Calling top or bottom is against the trend and is very risky. The reason I look for top or bottom can be explained in the following picture. I borrowed it from Philstockworld. They do a wonderful job!
Slope of Hope Blog Posts
Slope initially began as a blog, so this is where most of the website’s content resides. Here we have tens of thousands of posts dating back over a decade. These are listed in reverse chronological order. Click on any category icon below to see posts tagged with that particular subject, or click on a word in the category cloud on the right side of the screen for more specific choices.
This is just a comment-cleaner to let you know I'm going to be doing a market update video. This will make the 4th consecutive trading day in December that I've done one, and I'm starting to wonder if I should simply do it every trading day.
I was seeking, by the way, an appropriate image, so I used the search term "Insane". For some reason, the lovely lass below was included in the search results, and I found her a more pleasant visage than some of the other poor souls that came up.
I did a post back in July about Spectrum Pharma (symbol SPPI), suggesting it had the prospect as a successful long-term long (yes, long) position.
Well, it's up about 50% since that post. Not bad for five months, right? Good for me, correct?
Hey, not so fast. After I suggested this long idea, it went down 50% before going up about 100%. I didn't have the stomach for that kind of drawdown. I think most sensible people wouldn't have held on.
My point is that with these long-term plays, the ups and downs in the early stages will knock almost all holders out of them. People get misty-eyed over the multi-thousand percent point gains they "missed" with stocks like AAPL, but the fact is that Apple had huge ups and downs along the way. Only once you're deeply in the money can you tough out the drawdowns that blow most newer holders away.