Part2 Ecoool Turtle....
Many fine points.. Thank you ET ...very wise.
Another reason for investing with a medium term valuation range and buying when the price is below the bottom end and selling when the price is above the top end is that it helps avoid destructive short-term trading. Over time, investors win and traders lose. There's a weird cat on HC who claims to be a guru short term trader (certainly he always seems to make the right call when he reports the following day that he sold the high or bought the low of the previous day...genius!) and he claims that he can change his mind several times a day when trading. I think (in the nicest possible way) that he's deluding himself - as we have seen in all academic studies, the bulk of traders lose money - the only difference is whether it is 85% of traders who lose or 95% - so unless you're confident you are the 1 in 20 who get lucky, it's poor odds trading. Looked at another way, you'd be better off betting that you could throw 4 heads in a row than being a trader.On that theme, at 1pm today, when the price was $A2.20, our expert trader wrote "(not advice) i'm under the impression we are going towards end of day to 2.30-". Now, I'm the first to argue that price targets are really just hopes, and that you have no control nor influence over what other investors will do in the short term, but this is a concrete example of how even the best trader (so-called) gets it wrong. Far from going up 10c over the course of the afternoon, that $A2.20 price was not exceeded and the price subsequently moved down to $A2.14 just over an hour later. That's a huge 7% below the $A2.30 price estimate over a very short time frame.In the short-term, share prices are a random walk. Humans have survived by finding patterns in nature and exploiting them, so pattern recognition is in our DNA. It's why we trick ourselves into thinking we see patterns in share prices over time periods that really exhibit randomness. There is no reason to expect we can pick a short term share price pattern and failing to do so accurately doesn't mean we are no good at markets, it just means we are looking for the wrong thing, like thinking we can guess next week's Lotto numbers or where the ball will drop on a roulette wheel, and it may be even worse than that now that there are high frequency traders operating with servers next to the ASX computers who often trade for zero brokerage - how can you beat them at their own game? Much better off playing a different game, investing rather than trading, doing the research and knowing how to value competing investments, risks and potential returns both the upside and downside.My view on Mesoblast at present is that intra-day moves are totally meaningless and what appear to be big price moves up are just jockeying for position before we find out if Mesoblast really does have the breakthrough technology which will convince the FDA to approve their potential blockbuster product candidates. Trading these short term moves are no better than putting on bets at a casino. Owning the stock as an investor is more like owning the casino!
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