In the financial market, one can go wrong anytime in picking a stock. Financial market is a dynamic place and things can change any time. What's unacceptable: Not admitting when you are wrong. In other words - Staying wrong.
Let me explain this with a case study: Walt Disney
There is a simple trading rule I follow: A Bluechip stock with a solid business prospect is a BUY on decline stock. Disney showed up on Buy screen in June 2017
Disney is a technical buy around current market price. The dip buyers should come and take the stock higher pic.twitter.com/S4zigR1gc6
— Deepak Singh (@smarket) June 22, 2017
Disney stock looked quite attractive at 104 and it did not disappoint initially. The stock rallied from 104 to 110 indicating it was the right trade
But then in August, the stock started pulling back on concerns of earnings but most importantly company's confused thinking in terms of envisioning its own future.
Disney yesterday finally reaching to this conclusion. Everything now going streaming way from ESPN to Movies https://t.co/LLDQqfmK9S
— Deepak Singh (@smarket) August 9, 2017
Disney makes a decision to call off its content sharing arrangement with Netflix -very weird move.
Disney walking away from Netflix sounds stupid. Why reinvent the wheel? Why not ride on back of huge platform Netflix has created https://t.co/KdiYAlGQPz
— Deepak Singh (@smarket) August 15, 2017
I have always seen it's these small things that make investors nervous and leads to price erosion pretty quickly. And see what's happening now
A stock that was looking mouth watering at $104 is now losing altitude pretty dramatically. The stock gave an opportunity to get out between August 09-20 when it was trading near 102. All that was required: When facts change, you should change your opinion. Because once you miss the bus, it becomes a painful hold.
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Disclaimer – The state of the market notes is Deepak’s perspective on the market. The column is purely for educational purpose. Nothing contained herein is a solicitation to trade or a recommendation of a specific trade. By reading this publication you agree to make no trade relying in whole or in part on the comments of the writers