Wednesday, May 4, 2016

How Peter searched for stocks

If you followed Pete to look for gems in the mall, you may like ARO a lot, bought the stock and now the stock is filing Chapter 11. Several lessons to be learned:

1. Peter's preaching does not work here. It may work before. When too many folks following the same strategy, it is over-used and does not work any more. Even Cramer (typo?) did the same mistake by buying Bed, Bath and another B (forgot the name) documented in his book.

You cannot find the 'bubble' stocks in the mall: FANG (Facebook, Amazon, Netflix and Google), many high-tech companies and drug companies. That's why many gurus including Buffett did not beat S&P 500 (heavy with these 'bubble' stocks) in the last few years.

2. Buffett did not own a smart phone and did not use email. Hence, he does not understand the tech products and do not buy their stocks. He should wear a hat of investor instead of a hat for his personal consumer products in investing. If the product is a cancer-saving drug, he would not try to understand it until he gets cancer. Wrong hat again!

3. When you like a product, the stock may not be a good one. Check fundamentals...

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