RIMM announces tomorrow.
It has become, a deal stock. Everybody talks about it, everybody has traded it, everybody has a story about making huge bucks or losing some coin (mainly the shorts).
See, same applies to GOOG. Remember when GOOG announced, everybody had ZERO expectations, people were buying puts, and selling calls, scared it was going to tank…and then…and then…they blew away every-body’s guesses out of the water. That’s all they are, guesses. Look back at the twitter tape, there was only one bull in my twitter circle, who was long and proud. Me. Andy wrote a straddle, and got owned. See, you can look at the chart and see the pansies and bears sold all their shares or went short ahead of the CC. That’s causality at work.
The market anticipated so much bad news, it priced it into the stock. This happens, especially to deal stocks. You know the ones, AAPL, GOOG, RIMM etc.
This is how you tell a deal stock, from not a deal stock: Find an idiot, and ask them, if they know what a PE ratio is. If they don’t know what a PE ratio is, you can use them as a test subject for your stock. Ask them what the ticker is for company ABC. If they know it, it’s a deal stock. If they don’t, you guessed it, not a deal stock.
It’s also why, you don’t always have to chase smart money, you can chase dumb money too. Deal stocks, they go up, higher and faster than anybody with a brain could anticipate. Because these are the only stocks idiots know about. Idiots find out about them, and think, ‘maybe it’s going to keep going up…I better buy some’. Self fulfilling prophecy. So, there are more buyers for those stocks as opposed to the other, non deal stocks.
HEK is not a deal stock. Will it one day be a deal stock, I hope so, but doubt it. Because deal stock buyers, laugh in the face of multiplier expansion.
I am going to be off playing Tycoon in Toronto tomorrow…so I’m going to predict, my prediction. Since RIM has become a deal stock, it’s going to go the opposite direction of the color it trades tomorrow. If we see red ahead of the CC, look for springboard action in the AM, and get long at the end of the day. If we see green, well, look out below. Unless the chart looks like something leaked, don’t be stupid here.
I’m long either way, and I know I’ll do something dumb if I watch in real time. I’m long, and I plan to hold right on through the worst of any possible sell off. See, see right there, what I said, that’s me worrying. A little light in your head should go off - that’s a bullish tell, that I’m worried about a sell off. I don’t know anything anymore than the next guy does.
But I do know, markets are causal. Fickle too.
Yes I am however, long a bunch of deal stocks…trying to quit…but they are just such quick fixes, you know?
Recent Comments