Will the seller of Apple (AAPL) at $186 last night please stand up? Will the person who obliterated Facebook (FB) in the mid $170s identify themselves?
Yes, those trades did occur. They occurred after hours. They violated every rule I have ever taught and I want to out these fools as reminders that you must never underestimate the ability of traders to do the dumbest of things. And as far as I am concerned, those trades and dozens of others like them, were the work of true morons.
Here are the rules they broke:
1. Panic is not a strategy. There was nothing all that much to the "Currency Manipulator" designation, EXCEPT what these ridiculous traders made it out to be: something earth-shattering and 2009-like in its portent. What a terrible destruction of capital.
2. There is always a better time to sell than into the maelstrom. Go read "Confessions of a Street Addict." I actually did something stupid like this and documented my panic and my idiocy in an unsparing fashion. What's crazy here is that the bozos who were selling could just have easily sold this morning and done so much better. I don't care if we ultimately get to those levels that these traders took us to last night, what matters to me is that if they had just waited they would have made out so much better. Warning: if we do take out those levels, I will have to hear endlessly about how brilliant these knaves were. But can we just remember -- and savor -- this moment as the ultimate comeuppance for these mountebanks?
3. After-hours trading is the wild west and you get killed in the wild west with impunity because there is no marshal. I have raged against after-hours trading for years now. Some of these deep in the hole "prints" from last night are the work of a very sophisticated sell program linking futures to individual stocks in some sort of algorithmic way as in "I expect the market to sell off 3% tomorrow so stop me out on Apple down 2% and I will make out like a bandit." Again, I demonstrate conclusively in Confessions how disastrous this kind of rookie trading is. Investors, ask, learn, and take your money back.
4. Check your emotions at the door. I am finding so many traders who hate Trump and commentators who despise Trump and they are letting their seething resentment get the best of them. You want to be good at this game? Have no opinions on political leaders. Just do your assignment. Get the job done. Be Belichick for heaven's sakes. Or get out of here right now. You are doing a disservice to yourself and to others whose money you might be handling.
There's another whole cohort who believes that Trump has taken a knife to a gunfight. I think the better way to look at it is to say that, to them, Trump is genuinely crazy and has gone so far beyond making them look bad that their faces have been ripped off. They are trying to save the rest of their body now. There's way too much gloom and fear out there to make good decisions. I went on TV last night to simply say "dial it back," which was in reaction the geniuses who were selling stock down 600 Dow points.
5. Don't sell all at once. This is a corollary of my view that you don't buy all at once. The sellers just kept whacking and whacking stocks for more than an hour after the designation came out. Did they have any situational awareness whatsoever? Could they not tell that the bids were holding no matter how many times they drilled them? Could the not even take a breath and think, hmm, maybe the market knew this was coming? Don't do anything all at once. Never.
Now, again, I am going to tell you that the sellers will be joyous if/when the market comes down to their levels where they panicked. They will say "see, I told you so." But you need to remember where they COULD have sold. Right here.
Action Alerts Plus has been a great burden on me and my family. I hate making mistakes. Always have. Always will. I hate being graded. Did that. Done with it. But I decided to be a glutton for punishment to show you how it all works. All I can say is, after Monday night, maybe everyone would benefit from playing open-handed, particularly the investors in the funds that sold into oblivion, so they could pull out, perhaps as early as Tuesday.
