THE EMOTIONAL COMPONENTPu bluntly, the emotional component as it pertains to the market can kill you. On the upside, when there is just nothing but blue sky, people forget what the sell button is. If you climb to the top of a mountin, yes it's a beatiful view, but the fact remains, you're at the top of the mountin. We saw this euphoria in the market last November.
Whle greed is certainly a powerful motivator, fear is even stronger still. Fear and dispair lead to emotional selling, most often at the time you should actually be buying. These phenomenon pertain to all stocks, and to the market in general. I've found tops are actually harder to spot than bottoms. Seeing that gut-wrenching sell in the market, that capitulation, leaves footprints that are more identifiable.
But imagine if you could get a hold of those emotions. Not only get a hold of them, but actually invert them. Under this scenario, as a stock rises to dizzying heights, euphoria would be replaced by fear. And in those gut-wrenching downdrafts, fear would be replaced by excitment. Ohhh, the money we would all make!
As a trader, it's critical I leave emotions at the door. Actually, if life has me momentarily off solid emotional ground, I stay away from the markets. But in the best of the craft, you could stand behind me, and never know whether I was up or down. The emotional content remains the same. Static.
They say Spock would have made the best trader, and i get that. Calm, cool, logical to a flaw. There is big money to be made in the market, in all timeframes (trader to investor) with this approach. As it applies in current times, while people are running around playing chicken little, smarter market people look for the cues of these people screaming it from the rooftops. Those smarter people know it's time to buy.
Deisions of buying or selling should NEVER have anything to do with how much you've made or lost on a given stock. It should only be a careful consideration of the facts as you know them. That way, as people lose their minds and jump out the window so to speak, there is nothing to say you need to join them as well.
If I take a position in something, I'll imediately begin to ruthlessly challenge my choices. This assessment, again, is on the facts. Is the price action important? Yes, I suppose in the bigger picture, but not as much as you might think. Rarely is timing perfrect, but it is that steady hand that guides you first. For example, yesterday's price action put me offisde. I wasn't happy with the day and how it was going, and relentlessly tried to poke holes in my reasoning to buy, or search for reasons I should reconsider my stance. Again, this is a ruthless process. Having said that, I couldn't find anything that challenged my buy assumptions. The price action on the day was an anomoly I concluded, and with that, presented an opportunity to buy more which I did. So far today, that stance is supported.
In these times when the market loses its mind, and people are selling imotionally, do you homework, find the company that "should" be ding so much better regarding share price, and buy accordingly. I have NO doubt that this applies to all that Bombardier currently is, and certainly going forward as well. And if I'm right, daily, I'll STILL ruthlessly challenge my assumptions. It keeps me honest.
Imho, there are opportunities there in Bombardier. Do your own homework, get a grip on your emotions, and filter out the screams of pain going on right now. If you can do that, there is certainly money to be made.