Almost Everybody has heard about common known wisdoms, which are absolute nonsense. Here are some examples:

 

1. Nobody ever died from taking profits. Yes, if you cut your losses short you might do well, but if you do the opposite you`re headed for huge losses 

2. A fresh high is the best argument for further rising prices. Never buy at a top, big money buys low and sells high, so there might be no one left to buy but you, don`t care if it rises further on.

3.  Good time to buy defensive stocks. Bloody nonsense, either you want big profits, then you take a risk and buy the fast movers or you buy fixed income securities

4. You are convinced of a stock? Why not taking a look if the company has issued high yield fixed income securities? As a stockholder, you are a partial owner,  your level of risk depends on the decision of people you never met, dont know and you can never  be sure what they `re gonna do with your money.  Isn`t it better to be the creditor to whom that company ows money and pays interest for it?

5. A stock looks cheap, I will buy it. No. Cheap and expensive are relative, depending on supply and demand. If there is no demand for a stock it could drop another 50 % until demand increases. Remember, there is a reason why a stock dived deeply. Buy high at dips and corrections, sell higher

6. Changing horses will only pump up your broker`s account. Will you wait forever to sell a winner? Favorites change, if a stock has had a fast  run, sell at least partially and look for other opportunities. Watch intermarket spreads and correlations to make your decisions                                                                                                                                                                                                             ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

You might think that Analysts will give you good recommendations. Sometimes, but few people are giving away something for free. Analysts are employees of banks and brokers so they have to serve their companies. The companies`s interested is to make profits. As there is nothing produced by trading stocks, it`s a zero game at the end of the day. What one wins the other has to lose, keep this in mind!                                                                

                                                                                                                                                                                                           

What Do Analyst`s Recommendations Really Mean?        

                                                                                                                                                                                                                                                                                                                                                                   Strong  buy:  (Mostly on a rising stock that is almost peaking or a dropping stock that will continue it`s way down) = Finally buy  the stock, stupid, we want to get rid of it.

Buy: Same but not that urgent.

Hold: Almost sold out and waiting for a better chance. (not a bad idea to buy it)

Sell: Most likely around the bottom, Sell, idiot, you are sitting on big losses, do you want to increase it?  =  We want your damned stocks cheaper if you panic for selling it to you again 50 % higher.

Strong sell: Hurry up man, we want to cover our shorts at a maximum profit. Bottom almost reached.

No recommendation at all: Buy the stock, sleep well and sell it with a profit.

At the end of the day they are right all the time, you bought a stock because of a "strong buy" recommendation, have been into profit but didn`t sell, this is your own  fault. At the bottom losses increase for a while after a "strong sell" (very rare), then reverse. Bad luck, you didn`t buy it again at a cheaper price, you have been convinced that it would drop to much lower levels. Look at the typical cylce on the homepage.