Why I Don’t Gamble or Play the Stockmarket

Because I thought about shorting the carp out of Countrywide on Monday. The next day rumors started floating around about a Bank of America buyout and the stock leaped. Had I shorted it I would have put in a stop order. Still I would have lost some money.

Of course if I was a gambling man I would now consider shorting Bank of America. Why BoA is throwing good money after bad in the early part of a recession (I’m pretty sure we’re in one right now and expect it to be nastier than the last one in ‘01-02) is beyond me. I’m no financial genius by any stretch, but the deal doesn’t make sense – other than to somehow justify the bank’s infusion of $2 billion in August.

And that justification is psychological – not based on economic fundamentals. Just something to consider if you do gamble/play the market/own BoA shares…

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One Comment

  1. Naftali:

    A great way understand to understand investing in the market is to read Benjamin Graham’s “the intelligent investor”.

    Benjamin Graham was Warren Buffet’s professormentor at Colombia, and is known in the investing world as the ‘father of value investing’.

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