The Art of Stock Picking Part 1 Feb 2014

For the life of me I cannot understand the Wall Street machine that churns out stock selections on a regular basis with so little result.  But in saying this, we cannot blame the machine but rather the receiver for taking the information and choosing a path that may not have been implied. Information is a two edged sword; it can heal you, it can cut you. Many avid readers would pay enormous sums of money for information that can assist. But also that double edged sword of a 'tip can rebound if not used wisely; as in the legendary J.P Morgan receiving the latest stock tips from a shoe shine boy and wisely choosing which side of the information coin to play

http://en.wikipedia.org/wiki/J._P._Morgan  

However in spite of the overwhelming presence of information, one has his own mind. Be certain of one thing that I have observed in the many markets that I have traded over 20 years; and that is that in the markets a frozen mind bereft of the power of decision, is a dangerous mind to its own owner. Tips are the obstacles to self-determination. After all, in spite of all the great technical accomplishments of the great stock trader Jesse Livermore in the early 20th century, he fell at his own hand at his own undoing by dropping his guard and listening to a tip in cotton. 

http://en.wikipedia.org/wiki/Jesse_Lauriston_Livermore

So now lets come to the present, today, 6th Feb 2014. and try to understand a little bit more about tips.  For indeed the receipt of information and a recommendation really has to come down to what your expectations are in terms of a timeline to profit.

Clovis - CLVS - Chart as seen on a very good website-  http;//www.barchart.com

All the indicators show an upswing and many people thought that the stock was a great selection and would rise in the weeks ahead.

but the problem with technical trading is as always - Past performance does not guarantee future results.

The stock which rose in early January 2014 then declined as can be seen on the Yahoo Finance section.

http://finance.yahoo.com/q;_ylt=A2oKmK4KD_ZSFlYAsaezRwx.;_ylu=X3oDMTByN2RnanRxBHNlYwNzcgRwb3MDMQRjb2xvA3NnMwR2dGlkAw--?s=CLVS

and having risen to price 70.00 14th January the stock subsequently declined to 65.69 on friday's close.

Now the interpretation of the price movement can really depend upon 2 factors:1. is this a buy and hold long term strategy or 2. is this a short term swing trade strategy to take advantage of short term price volatility?

The answer to this question depends upon your demeanor.

Should the stock be trumped as a buy and hold? Well the verdicts not out yet in a short time period such as 3 weeks if this was a log term trade. But for the short term swing trader who did buy, losses would have accrued.

were the stock bought as a 'sleeper"  it could be considered an investment, but were the stock acquired as a trading position, then the leaper may have reversed and caused losses.

This is why in selecting stocks you need to identify for yourself your strategy in terms of time and your modus operandi. And many traders get this wrong by using the wrong powers of analysis to interpret a chart.

Tips can be dangerous but they can also be guiding ropes in the dark. it all really depends upon your  time horizon and your own investment growth plans