Post of the Day
December 29, 1998
CMG Info Services Folder
Posts selected for this feature rarely stand alone. They are usually a part of an ongoing thread, and are out of context when presented here. The material should be read in that light.
Subject: Re: Look at MZON
Seriously, don't look at MZON. And don't look at UBID. These rules of thumb are roughly tantamount to mom's rule that you should never stare directly into the sun.
Put another way, every poker table has one person who is the least experienced: drawn by the lure of "easy money," this is the person who is most likely to lose his cool when the chips are down, and this is the person who is most likely to reveal his strategy by the way he plays so the more experienced players can exploit it. The other players call this player "the sucker," and often they let him sit and play for a while before sucking his money away from him. The sucker leaves with much less than he came in with, and the players sit and practice among themselves and make the table look enticing again, until another sucker sidles up to the table. Then the pattern repeats.
|"...every poker table has one person who is the least experienced: drawn by the lure of 'easy money,'..."|
What I'm trying to say is, when you get to the poker table, the first thing you should do is scan the other players at the table, looking for the sucker. And, if none of the other players is easily identifiable as the sucker, then chances are high that the sucker is you.
When a stock quadruples in a day, lots of people notice. The temptation to give into greed is great -- believe me, I know, I've been there repeatedly. But you have to look at what's fundamentally caused that stock to quadruple in a day. Chances are great that no wonder how terrific any news might have been, no news is worth a stock price quadrupling in a day.
Aha, you say, then the stock is overpriced, so I can make heaps o' easy money by shorting this stock. Not on your life. The powder keg caused by rampant speculation, very few shares of a hot stock available to trade, and an abundance of new suckers at the table (some 70,000 people enter the Internet each day, and at least some percentage of them trade online each day for the first time) -- this creates a combustible, unpredictable cocktail. A stock that jumps from 15 to 56 in one day can jump from 56 to 120 the next day, or it can drop from 56 to 3 the next day -- and there is no way to tell because it's not based on any consistently predictable information! Chances are, though, the "other players" are out there making money (or losing small amounts of money and getting out quickly, as professionals often do) to try to tempt new suckers in with the salacious appeal of a quickie.
Don't give in to temptation. Don't buy such stocks, and don't short such stocks. Treat them like the sun, and don't look into them at all.
You may think I'm wrong. You may think you can make a killing. And you may use this strategy to be up for a while. But don't deceive yourself: the "other players" all have terrific poker faces, and they all have iron constitutions. They know how to shake up a sucker, and they know how to get his money with minimal effort. I've seen it happen many times to many people with many Internet stocks. Put simply, if you don't know what you're doing, then don't do it.
|"...the 'other players' all have terrific poker faces, and they all have iron constitutions. They know how to shake up a sucker, and they know how to get his money with minimal effort."|
Please don't take this as an insult. You're not the first one to fantasize about fast cash, and with the rate the Internet has grown since you posted this, you already are not the last. Please trust me on this one and leave the gambling to those speculators out there who do this for a living.
One more thing. To quote your post, MZON sounds like "AMAZON" and definitely catches your eye on the ticker because such power of association with respect to the publicity, controversy, and growth of AMZN. There might be something here!
This is called a siren, and it sings a sweet song in an attempt to lure your boat directly into the rocks.
Please please please don't go to that poker table!! Don't invest any money for now. Spend a couple of months reading and understanding yourself and what you hope to accomplish, and then invest accordingly. There will always be opportunities to make money, but there will also always be opportunities to lose your money very quickly. Please... don't learn this the hard way.
The Post of the Day may be edited for readability or length, but never for content. The opinions expressed in the Posts are those of their authors, and not necessarily The Motley Fool. We make no claim or warranty as to the veracity or accuracy of any post, and present this feature only as an example of what may be found on our message boards. Don't take the Post of the Day, or anything else here, as gospel and, as our seventh grade English teacher, Mrs. Peacock, used to say, do your own homework, and avoid run-on sentences.