0708aggie said:
This is going to end very bad for a lot of people. Make money while you can. Someone will be left holding the bag.
I agree, there is some hysteria and bubble stocks going on in some sectors and these stocks being pumped on the internet.
My personal investing philosophy is heavily influenced by two texts, "Fooled by Randomness" and "One up on Wall Street."
It's very apparent momentum from traders can really move the stock price, but I think for long term the prices eventually come back to fundamentals of the business.
I will say watching some of these stocks the last 6 months may open me up a little to momentum trading, but I think it's one of those things, it works until it doesn't.
Just make sure you're managing your risks and have an exit or hedge in place to mitigate a black swan.
My biggest take away from "Fooled by Randomness" is to never be in a position where one big move against you wipes you out. "Fooled by Randomness" is a cautionary tale.
It seems traders can build up such confidence to the point they believe their position is fool proof, and ignore what if it goes against me, and this don't hedge properly. Another book that sticks in my memory is "What I Learned Losing A Million Dollars" written by a commodities trader who lost most of his net worth and refused to cut his losses short.
