Stocks Have Personalities
And some of them are $%^holes.
You enter the bar. It's filled with stocks, er, people. It's a more upscale bar than what you're used to back in your hometown. It's filled with impressive people, or rather, people who want to look impressive. They try so hard, with their designer brands and high-end suits. You, on the other hand, wear tennis shoes and call it as you see it.
You are now sitting at the bar, and your eyes are looking for the next grand slam. Of course, I'm talking about stocks. Similarly to how one would pick a lady friend at the bar, one can pick a stock off of a daily gap up list. Would you not keep an eye on the stock, maybe for a day, a week, or a month? Keeping an eye on it and paying attention to it is how you end up taking the stock home. Or know if it sucks.
Stocks have personalities. If you pay attention to them, get to know them, and see how they react to you and the market, you'll see how you can use that to your advantage. Chad could easily steal your girl because he has more money than you. Your date could very well go to dance because her friends are dancing. Your date might not even be allowed outside because her dad won't let her. How fair is that? Not very. The whole thing is rigged anyway, so might as well keep playing because we're psychopathic degenerates.
Speaking of which, Chad stealing your girl has got to be one of the most gut-wrenching feelings out there. I only went to one party in college my freshman year because a frat boy stole the girl who was macking on me the entire night. That was my first and last time. I'd rather lose ten grand than have my ego curb-stomped, although the stock market can offer both.
Market makers are high-volume traders that literally "make a market" for securities by always standing at the ready to buy or sell. They profit on the bid-ask spread and they benefit the market by adding liquidity. It's like the wild west out there, and these Chads can and will trade against you. Even your brokers will do it. They buy and sell the shares of a security. Whenever an investment is bought or sold, there must be someone on the other end of the transaction. If you want to buy 100 shares of FUBO, for example, you must find someone who wants to sell 100 shares of FUBO. However, it's unlikely that you will immediately find someone who wants to sell the exact number of shares you want to buy. This is where market makers come in. Without them, nothing moves. And while the money makers can steal your money, institutions and banks can complete offerings with companies of the stock you have a position in. This will screw you over most of the time. When a company increases the number of shares issued, or shares outstanding, through an offering, it generally harms investor sentiment and price. When companies dilute their shares, the value of each share goes down. Chad can get your shares at a cheaper price, and your girl.
If you want to impress your date, you actually need to pay attention to her. Listen to her. If you noticed last time she got up from the bar to go dance with her friends, guess what she's gonna do the next time her friends start mingling? Probably dance. In the market, sympathy is based on the relationship that a stock has and how you decide to play that relationship from another company because it's sympathetic and related to it. If a stock in one sector, like electric vehicles, is hot then there's a chance other stocks in that same sector will pop off. But, you HAVE to watch the main runner. If I'm comparing stocks in the electric vehicle sector, I need Tesla on my screen too. Once your dates friends stop dancing, your date is going to stop dancing.
Sometimes, you'll have to go steady with your stock. Most of the time, they'll have overprotective fathers who will not let them go out. The prices are being manipulated and pressed down by money markets and algorithms, so in other words, she can't hang out. You'll have to keep your distance, but keep a distance and watch. Maybe add on dips and slowly accumulate. She'll be able to hang out, eventually.
Lastly, CEO's represent the face of the company; the personality behind it. For instance, Peter Thiel of Paypal has been pounding the table on investing in human immortality and Tesla's Elon Musk often mentions nuking mars while garnering attention for smoking weed on the Joe Rogan show. The market reacts to these personalities, as higher stock volatilities are attractive to buyers. In penny stocks, these garbage companies are often looking to screw over their shareholders. Offerings and diluting shares are ways that the CEO and company benefit, while we get screwed. It's f'ed up that they can do this, but the best thing we can do is manage our risk by learning their behavior.
The importance of stocks having personalities is that not all of them are the same. Their movement and momentum are specific to them, just like every girl at the bar is different and all your naughty little tricks won't work every time. To figure out their personality, you need to pay attention to them. Luckily for us, reading stocks is way easier than reading women. Watch them from afar, keep them on your list, look at their support and resistance, how they react to other stocks in the same sector, the bid/ask spreads, and most important of all, their SEC filings. It's like reading their diary. Imagine going to the bar and knowing what to expect? Couldn't be me.
**Not a financial advisor. Articles are opinions only.
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