I'll be quick here today and get to the point. You and I have no idea why a stock price is going up or down. It just is happening. Deal with it. Several years from now we may have the clarity to know why a stock price rises or falls. But the closer you are in time to equity volatility the less you know in the fog of war.
Case in point, many stocks have risen inexplicably for the last few years. Wall Street banks are realizing it may be attributed to, in part, a man named Bill Hwang. You can read the unbelievable story here.
The takeaway is that we are taught to think like Warren Buffet. See a stock as a business that is either being fairly or unfairly valued by the crowds called the stock market. We are taught to look at earnings, EBITDA and the leadership of the company to figure out which stocks are most likely to increase in value.
Furthermore, we watch pundits explain to us why a stock went up or down in a given day. It went up because of Biden or it went down because of Trump. It went up because of inflationary concerns or it went down because the Suez Canal is clogged. Truth is, the economic pundits are paid to sell advertising. And attracts eye balls is confident prognostications and forecasts unlinked to accountability.
However, as you can see form the article recent price volatility in several positions can be attributed to a man you've never heard of working at a company you've never heard of using leverage you cannot fathom.
Which is why I'll repeat over and over that technical analysis is so important as an aspect of your investment strategy. Price matters, trends matter the why doesn't matter at all. It just is. You and I have no idea why a stock price is going up or down. It just is happening. Deal with it. Several years from now we may have the clarity to know why a stock price rises or falls. But the closer you are in time to equity volatility the less you know in the fog of war.
Confused? Scared? Don't be. Let's talk it over, click here.