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CUT LOSS - the Culprit!

rds · 12 · 2337

rds

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on: Mar 26, 2014, 01:26 AM
Traders consider Cut-loss as a very important tool for trading in stocks, yet, I think this is the major culprit why stock's price SUDDENLY dips without any "logical" reason.

Imagine each trader setting a certain amount as cut-loss...and each time it breaches a certain amount, aided by those traders-speculators (who do not know when and why they are selling) the price of a certain stock will eventually go down, breaching one cut-loss amount after another, like crazy as if the company will become bankrupt tomorrow.

But the cut-loss thing is best benefited by the VI's...while the stock's price will unreasonably go down sometime due to the cut-loss of the traders...the VI will have an opportunity to buy at a lower price.


scorpions84

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Reply #1 on: Mar 26, 2014, 10:52 AM
It definitely adds up.

Anyway, as far as I know, the "major culprit" is that big institutional players are "unwinding" their positions. :)


wilch23

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Reply #2 on: Mar 27, 2014, 09:52 PM
So instead of calling it the culprit, shall we say it's a buying opportunity for VIs?

Sama na rin other investors who are patiently waiting to get in, hehe.


scorpions84

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Reply #3 on: Mar 28, 2014, 10:45 PM
lol...mahirap na tanong yan ah...:D


Wills

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Reply #4 on: Apr 08, 2014, 10:09 AM
you know how much valuable the stock MBT. Lets say it has a fair value of 90 pesos per share.

If there are 1Million total shareholders and 50thousand of them sold down MBT to as low as 60 pesos per share, most of the time those 950thousand shareholders will panic and believe the 60 pesos that is dictated/transact/quoted by 50thousand shareholders is the fair price.

Question: Are you going to be influenced by what you see on your computer screen?

It is really true what Lynch said Stock market really does victimise the unconvinced.
« Last Edit: Apr 08, 2014, 10:14 AM by Wills »


mokongboy

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Reply #5 on: Apr 08, 2014, 10:59 AM
Ano ba no. 1 rule ni Buffett?

Tsaka ung pangalawa?





sj.unite

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Reply #6 on: Apr 08, 2014, 11:14 AM
Ano ba no. 1 rule ni Buffett?

Tsaka ung pangalawa?



You do not talk about fight club? :P


« Last Edit: Apr 08, 2014, 11:16 AM by sj.unite »


Wills

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Reply #7 on: Apr 08, 2014, 11:19 AM
^ :rofl:


jmces

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Reply #8 on: Apr 08, 2014, 02:00 PM

You do not talk about fight club? :P

whahahahaa


rds

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Reply #9 on: Apr 09, 2014, 03:28 PM
Ano ba no. 1 rule ni Buffett?

Tsaka ung pangalawa?


Rule No. 1 - "Not to lose (due to cut-loss)"


Wills

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Reply #10 on: Apr 10, 2014, 12:44 PM
On losing money.....

When you buy 10 hectares of farm land in the farmlandMarket you engage in a transaction and pay the necessary cost.

Same with stocks when you buy 10 thousand shares you also pay transaction cost.

If you paid 1million pesos for a 10 hectare farm land your 1 million pesos is converted in to exact 10 hectares of crop producing land, the money you paid in fees and transaction cost is not converted in to anything that is a money lost in the air and will never produce anything for you.

In the farmlandMarket people will buy farm land in different prices depends on the market moods and motivation. In reality you don't care whatever happens in the market after you bought your land, all you care is to produce crop and earn from it.

When the price of your farm land decrease it will not hurt your earnings because your 10 hectares of farm land is still 10 hectares, same with stocks you still have 10 thousand shares whatever price the market tells you!

You don't lose your land not even 1 hectare of it when there is a market panic!

BUT in stock market we don't do that, the market is very important for us, most people in stock market don't care about the earnings of the business all they care is what other people think of the stock's price every f*ckn day! Every f*ckn day!

Be careful on Greater Fool Theory.
« Last Edit: Apr 10, 2014, 12:57 PM by Wills »


Wills

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Reply #11 on: Apr 10, 2014, 01:04 PM
If you would just hold AC and compound dividends from 1981-1982 to today, how much could we earn?

In 1981 AC had an earnings of around 200 million pesos per annum and now it is around 11-12 billion pesos per year!



 


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