Panic never made people a dime, yet traders never seem to learn this lesson.
Last night as I left the office, I was aghast at the after-hour prices that were going across the lower part of my screen after the news broke of the North Korean missile passing over Japan.
As is so often the case, those executing these trades shock me with their lack of rigor. These are people who seem to be taking a permanent intellectual vacation, a real bunch of chowderheads, and I want to demonstrate their idiocy by examining some of the trades that I saw pass by on my way out.
First, someone was selling Alibaba (BABA) down five points from where it closed. Let's think about this. What has been the one constant of this North Korean crisis besides the insanity of Dear Leader? It's the insistence by the Chinese to do nothing about the situation. We keep thinking in a blast of stupidity that somehow if we prod China, the PRC will help us.
They are helping us the way they helped us when they crossed the Yalu in October 1950 to protect the North during the Korean War. The stock was sold repeatedly and relentlessly. Given how well Alibaba is doing and given how China's been about the only country that shouldn't fear the North Koreans, this stock was a huge buy, not a sell.
Second, we saw a wave of selling in the stock of Nvidia (NVDA) , which has become a total anathema to all those who used to love it. Again, here's a company that is at the heart of the Internet of Things. If you listen to the Best Buy (BBY) conference call, all you want to do is buy this stock because its chips are behind so many of the devices that are selling so well. Remember, Nvidia is at the heart of the artificial-intelligence movement and is the wizard behind home assistants.
Apple (AAPL) gave up more than its point-and-change gain and appeared to be breaking down to the mid-$150s. Tomorrow we are going to listen to Warren Buffett most likely praise the company and we have a new release of an iPhone in a couple of weeks. Did someone feel that there's going to be a delay in that because of North Korean missile firing? You want to be really grim? These traders should have been buying Apple and selling Samsung, with a headquarters that is located perilously close to the epicenters of the potential conflict. (Apple and Nvidia are part of TheStreet's Action Alerts PLUS portfolio.)
Finally, I saw selling in all of the usual targets of Amazon (AMZN) . I am beginning to wonder at this point whether we haven't exhausted the "sell everything because of Amazon" story. In particular, I notice that the ferocity of the selling in the stock of Costco (COST) has died down, perhaps because it can come underneath the prices of the new Whole Foods (WFM) without a problem.
Obviously, Amazon could issue a release that it is going into the credit card business tomorrow and there goes MasterCard (MA) , Visa (V) and PayPal (PYPL) . But my take is that the sellers should wrap up their unloading and let these stocks rally. You have breathing room before the next Amazon foray, given how it's not going to issue a release every day about low prices at Whole Foods, or if it does, no one is going to pick it up as the free publicity, for the Seattle giant may at last have run its course.
The moral of the story? All of these panic sales lost money. Being thoughtful has a way of making you money. Make sure your brain is engaged before trading. That gray mass in your head: It can be very helpful unless you choose, deliberately, to lose money.