RE:Understanding The BubbleJust keep in mind star was promoting NMX. If you followed his advice you would have bought into that bubble of a stock and got absolutely killed. Meanwhile over here with WEED star missed out on some insane gains. I think Star is a great writer but I don't listen to his investment advice personally. Moose
starsearcher40 wrote: For those who have been around a long time in the market, you'll remember the initial tech bubble in the late nineties. Damn those days were fun! Literally, you could throw money at almost anything tech/internet related, and the stocks would scream upwards on the slightest news with dreams of innovation and worldwide dominance from companies that really were only startups at best.
These were the rules:
1) Buy
2) Buy on dips because it will ONLY be going higher.
3) Don't sit idle, because you'll miss out.
4) Any news is not just news, it's phenomenal news.
5) Dream big, and if you don't, you'll miss out.
6) It will be this way forever.
I can remember the day that all changed. It was otherwise a nondescript day, but on that day, the rules changed. But we didn't know it. We didn't think it could ever happen. We kept on playing with the rules noted above. But the rules changed.
1) A dip? Buy more. But no. It should have been "sell the rally", not "buy the dip"
2) Dip further? Buy more still. But no. This just magnifies the pain to come.
3) Keep dreaming, because those were the rules. Don't let realities get in the way of dreams or imagination. But no. Blind faith kills.
4) News is still good...isn't it? Well why isn't the stock moving up. Hell, what does the market know. I'm smarter than the market. But no. You're not smarter. The market is always right as it reflects the sum total of all thoughts of all people at any given moment.
I had friends lose it all. They washed out of the market completely. I personally took a huge hit back then. I survived, but it wasn't pretty. For all of us, it was our first view of "the other side of the fence". We weren't ready for it. We didn't know it. When we did know it, we didn't want to believe it.
That experience back then, almost 20 years ago now, left an indelible impression on me. It stays with me today, and that is a GOOD thing.
So the question is, how much of this is a mj sector bubble? Personally, I think there is a LOT of bubble here. You just don't have those wild kind of swings without it being a bubble. WEED would be the poster child here of that phenomenon, and the short position (which is right far more often than wrong) is going to make a killing here.
I said in a previous post that WEED is entering "a different phase". This I believe is true. To everyone here, play it how you wish. And truly, I wish you well. My only advice to you here is to realize that the "rules" have in fact changed. If you're playing by the "old rules", it's a dangerous proposition for your account.
The good news is, that all bubbles do eventually pass. Personally, I would say we're at the mid-point of the mj sector bubble correcting. This will run its course, and then there will be good opportunity as a value play to come in. I have no doubt WEED will remain king of the sector going forward. But being king does not make it immune to the realities that all stocks, and especially those in a bubble, do face.
Best to all whatever your strategy is.