There’s an old Wall Street adage: “Buy the rumor, sell the news.”
This is another one of those sentiment-related features of the market I’ve been telling you about lately. A lot of investors and traders pounce on headlines that speculate on what might happen, do some trades, and push the value of a particular asset up or down for a short time.
Then the actual outcome hits, and nine times out of ten, it doesn’t represent too much of a change in the status quo. So there’s another flurry of trades, and the asset goes back to where it was. These kinds of changes can happen within days of one another, and they’re only getting faster as the “five-second news cycle” continues to dominate.
This past week we had some great examples of this phenomenon, and it provides us with the opportunity to either take profits or change course before taking a huge hit on a stock that’s just not going to perform the way the media thought it would.
The three picks I have for you have been in the news lately, pushed along by the momentum of some big stories.
One of them is a proposed buyout for a major media company that’s fizzling. The second is a travel industry company riding on rumors that the pandemic is easing once and for all. And the third is a finance industry stock that didn’t quite meet expectations on its last earnings report.
Check out this video for the tickers and my explanation for why you should sell all of these now…
In the short term, it’s possible to make these sentiment-based trades work in your favor, but it can be hard to find consistent returns, especially with the volatility we’re seeing. Investors are going to need some out-of-the-box thinking to find good places to park their cash for the long haul.
Fortunately, in times like these, there’s one thing you can always count on – the American entrepreneurial spirit. Right now, the next business visionary, in the same vein as Jobs, Musk, or Gates, is hard at work trying to make their dream a reality.
But they’ll need help to do it,…
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