Quit watching price action
posted on
Aug 26, 2008 11:18AM
Creating value through Exploration and Development in the Sierra Madre of Mexico
What if there was a stock market for sales of new Honda Civics? What does one cost, about $18,000?
Say you were sitting there and watching the tape, so to speak. You just got your Civic for $18,000, and you are feeling pretty good. Then you see come across the tape that someone just paid $19,000 for a new Civic and you feel even better, because you think you got a better deal than that guy. Then you see someone pay $15,000 for one, and you feel miserable.
Why don't you just focus on your car and stop watching the tape. $15,000? $19,000? Who cares? You've got the car you wanted and it drives. Quit spending so much time being jealous of someone else's deal.
What if the last trade of the day, someone gets one for $5,000? It just so happens that the car dealer, Crazy Larry, got a little too crazy and had a videotaped romp with someone named Cynthia which ended up in Larry's wife's hands (the videotape, not Cynthia) Cynthia ended up with a brand New Honda Civic, but mailed the tape accidentally...OOOPS!" SO Crazy Larry had to unload some inventory fast in order to buy some very expensive jewelry to placate Mrs. Larry, and also to inspire her to stay Mrs. Larry.
Meanwhile, you don't know this. You're just mad because someone's getting Honda Civics for $5,000, and it's not you.
Is the price of Civics dropping? NO! Well, in reality it is, for a few sales. And Honda Civics close the day at $5,000. You just go and try and buy one for that, however! It won't happen.
So don't worry about some bozo who moves 200 shares of Kimber for 1.08. Think about where Kimber will have to be in three years and go throw a football around.
Just remember, the world is a complicated place. Believe what you understand and don't envy other people's seeming good fortune. Lots of time it's neither good nor fortunate.
Watch the story, don't watch the tape.
Bull