Share |

Tuesday, March 10, 2009

The Price Didn't Make Sense

Two days ago my co-worker was telling me that the price of General Electric(GE), at the time trading at $7, was just ridiculously low and just didn't make any sense. Since he isn't a trader at all, I had to explain to him that the price of the stock is not driven by fundamental but mostly by psychology of investors. This is why you would see stock undervalued. And this is exactly why legendary investor Warren Buffet can make so much money - buy cheap undervalued stocks.

Then I told myself, "He's damn right. The price just doesn't make sense anymore". So I turned my doubt into action and bought GE even though I normally don't touch those 'stable blue chip' stocks. Today that stable blue chip stock rallied almost 20%, more than three times the gain from the indices.

So next time if you ever hear someone talk about the same thing again, maybe it's time to turn someone's doubt into profit.

0 Comments:

Post a Comment

Subscribe to Post Comments [Atom]

<< Home