Filed under: Google (GOOG), Apple Inc (AAPL), Merrill Lynch (MER), Goldman Sachs Group (GS)
Last month at the Sundance Film Festival, I saw some great movies, partied it up a bit and schmoozed with celebrities. Perhaps it’s the pseudo-celebrity status that came with my TV show or the $300,000+ personal loss I took on an investment I truly believed in, but I never get starstruck anymore. Not with celebrities and definitely not with companies. And as an investor, you can learn from this. I’ll explain.
While at the festival, I bumped into “celebrity” Maria Bello, and my ability to have a casual conversation with her led to an interesting encounter highlighted by some flirting and several great pictures (see them all HERE).
Ms. Bello barely gave starstruck, incredibly crazed, fans the time of day; after all, nobody — celebrity or not — can really take anybody who’s screaming and crying in awe of their presence very seriously. So, while it was a fun moment for me, I couldn’t help but think how this related to the stock market.
And, it hit me. Too many investors buy stocks because they are starstruck by the companies themselves. Superstar companies like Apple (NASDAQ: AAPL), Google (NASDAQ: GOOG), Merrill Lynch (NYSE: MER) and Goldman Sachs (NYSE: GS) simply have too many groupies. Don’t be one of them. They can head south just easily as lesser quality companies, sometimes even faster!
Want some examples? Sure, my pleasure! Thanks to my cynicism, back at $200, many starstruck investors criticized me for this article in which I basically said Apple was not worth screaming and crying over. The Google groupies weren’t too happy with this video, when I advised shorting the stock at $700.
Perhaps a better comparison would be to solar stocks like First Solar (NASDAQ: FSLR), Sunpower (NASDAQ: SPWR), JA Solar (NASDAQ: JASO) and Solarfun Power (NASDAQ: SOLF) as at the peak of their runups last year, investors truly were screaming and crying to buy shares at any price. Now those investor groupies are just crying.
What’s my point here? Simple-when the volume of crying and screaming groupie investors reaches unbearable levels, that’s the time to sell, and for aggressive investors, to short.
Timothy Sykes writes the blog timothysykes.com, is a former hedge fund manager, star of the TV show Wall Street Warriors and author of the book, An American Hedge Fund: How I Made $2 Million as a Stock Operator & Created a Hedge Fund