I’m not qualified to give financial advice. I’ve rarely found many people in life who are. The people who get certificates assuring their quality do not have poor intentions. Yet, when you must give them 1% of your money (or more) to invest, instead of .1% to keep it in a similar fund, they may not be so quick to tell you are better off in that lower expense fund. I’ve also seen instances where you give them more than 1% and they’ll build you a customized portfolio which then gets out performed by the index and they still get their money. Financial advice is a cutthroat business that I’m on the outside of. What I write in this post is not that.
What’s Gambling vs Investing?
This is a new generation of investors.
The reason this type of trader has evolved is because of trading platforms like Robinhood. Robinhood isn’t built to allow you to trade. That’s one of its functions but its higher priority is to dive into your psyche and give you the endorphin release that comes with trading so you become addicted. They also have made options trading en vouge by making it simplistic to people who shouldn’t be trading options. Options, especially with margin, is how you dig a deep hole. The younger generation looks at this pandemic as stock trading is the easiest way to make money and they aren’t wrong…yet.
If you picked a stock in March, it didn’t matter if you picked the Encyclopedia Britannica, the entire market plunged and it was shooting fish in a barrel. This has given people an unrealistic viewpoint of the stock market that stocks only go up. Its been an incredible rally / potential bubble propped up by stimulus money.
What do you get when you have millions of people not working? Collect unemployment? Small businesses shut down and major corporations raking in the cash? If you answered a booming stock market, you’d be correct. What I’m seeing is a reminder that you don’t know you’re in a bubble until it pops. It’s simple to look back 5 years from now and say, “well those valuations didn’t make any sense at all?” Yet here we are and I’ll share a quick personal investing story.
Here is a writer for an investor blog to give you an idea of how no one knows what they are talking about:
At $1.50, I’d say go for it. At $3.25, the risk-to-reward isn’t nearly as attractive. If you’re an aggressive investor and can afford to lose it all, I don’t think you need to wait. If you’re risk-averse, I’d wait for it to fall back to $2.50.
I mentioned UAVS on my blog back in August when it was at 3 and then again before Christmas when it was at 6. It’s currently a shade under $15. I own thousands of shares at a low cost basis so I’ve made what some consider substantial money. I share this not to brag, although I’m sure people would resent this fortunate event, but to explain why this post is titled “No One Tells You When To Sell”.
AgEagle did 1 million dollars in revenue last year and has 6 employees. The current market cap is $877 million. I understand that stock prices dictate future expectations but this doesn’t make sense. The same way that Tesla shouldn’t be worth more than all the other car companies combined. If you’re in the bubble, you can’t see that it’s a bubble. Now picking the stock is one part, rising is a second part, selling is the hardest part. I bring you to example #2.
Evan and I have been watching NVAX for over a decade. This stock produces vaccines and was / is a perfect candidate for a high flier during a pandemic. Well we have a pandemic and the stock shot from $5 to $170. I owned hundreds of shares and sold some on the rise up at $60, $75, and $100. I missed the rise way up. I kept 100 shares, but it wasn’t the home run it could have been. For me, I didn’t feel that stocks should rise like this. In the moment, it didn’t seem possible that it would keep going up. This is why I’m writing this post and giving my thought process on UAVS.
If tomorrow UAVS lost 50% of its value, I could easily say that I should have sold. I’m prepared for this to happen. There is no reason that this shouldn’t happen. If I think like that then I should sell it all right now. However, if they get bought by Amazon and are asked to produce 10 billion dollars worth of drones in the next 5 years, then I’d be Larry David’s character in Clear History. My point is that the present is unclear. I didn’t know that I’d be in this position with UAVS. I’m not that smart. I do know that what I’m seeing is why I sat on the sidelines for years only investing in funds like the 2050 retirement fund and other large indexes. When it swings down, it can chop your head off. Until you get your head chopped off, you don’t know to be careful and that’s what you’re seeing in this time period. I’m not saying don’t invest, I’m only warning that making money is not easy and when it is, watch out.