This morning I woke up to a Zynga stream suggesting the end of the world was near, very near. That the stock was headed towards $0 and tech bubble 2.0 was coming crashing down. I really don’t have the energy anymore to qualm the unrest, but you can refer you to I Was Wrong About Suggesting A Tech Bubble and Looking At Zynga’s Potential to show you that the masses sentiment is wildly untrue. Rather, what I want to hit on right this second is rather a larger concern of my in this new age of technology, when the stream goes negative on you.
The bandwagon, my favorite analogy. Why you say, Young Gun, do love this analogy so much? The response is oh so simple, the bandwagon, it can be used to your great advantage. In the case of trading, it is sometimes best to work in the shadow of others, more knowledgeable than yourself. Hey that’s why we read blogs and talk to strangers about investing. In this case, referring to my mornings example, sometimes the bandwagon is wrong, very wrong. The stream this morning was quite wrong about Zynga, with outrageuos suggestions of $0 and $3. When you know that the bandwagon is heading in the direction far from the truth, you can sit back, laugh, have a cold one, because in due time the profits will come.
This obvoiusly doesn’t hold true to every company that trades down. It accounts for companies that have growth potential, make money, so on and so forth. You are smart enough to know what I am talking about. My favorite example would be LULU in the midst of winter. I believed in the story, the growth, the desire for every woman in america to own their lovely pants (ahh yoga pants). I capitulated, I did so because I listened to intently to the voice of my peers and not my own. We all know that lululemon sits on its high and mighty stead currently, and I sit nowhere near it due to my misfortunes. So when the negativity surrounds you, sometimes that gut of yours knows the story better than any stream.