Times change. And if you don’t adapt, then you’ll get run over. The last week has seen another swath of stocks swinging like crazy once again. Previous stocks on the radar included Newegg (NASDAQ:NEGG), Marin Software (NASDAQ:MRIN), and Carver Bancorp (NASDAQ:CARV), and SGOCO (NASDAQ:SGOC). Each of these shares surged more than 100% in a few days. Now we wait for a selloff for each one. The ongoing bounce back and forth has created a new way of speculation on Wall Street.
The entire school of thought has been thrown out the window for the better part of six months. I feel bad for anyone with a CFA right now trying to make sense of WallStreetBets. Who in their right mind could be happy they spent three years studying for THOSE tests, and now some kid in a pair of sweatpants is crushing the market from a dorm room in Milwaukee.
Some Stocks on the Radar are Worthless, But Speculation Continues
Why would anyone pump a lot of money into a stock like SGOCO? And what does SGOCO do? Well, I assure you… there are no red… flags… on… this… one.
SGOCO is headquartered in Hong Kong. It’s domiciled in the Cayman Islands. Businesses include money lending, virtual reality, environmental protection, and global property investment. Last year, it generated $4.29 million in revenue. It had a negative profit of $1.07 million.
And with all of these different businesses that appear to be creative heavy, the company spent a whopping $6,000 on research and development last year. Again. No, red flags here. This is pure speculation. But for a dollar, sell for two. And hope that you aren’t the person holding the bag when it all blows up. That’s the nature of the market for now.
We’ve moved from long-term investing to one-year buy-and-hold to one month speculating, to one-week swing trades, to day-trading… down to minute-by-minute technical buying and shorting. The moneymakers are using tight trailing stops and taking calculated bets over and over and over again. In essence, people are learning how to lose and how to exit trades.
What to Do Now
The coming weeks will require a different type of approach. We’ll be looking for strong price-bound stocks that can continue improving price trends while avoiding the Reddit crowd. I’m more committed to stocks that continue to rise due to increasing institutional interest and improving sales and fundamentals. We’ll talk more about how to find those in the weeks ahead.