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'Don't Reach, Young Blood!' An Elemental Investing Mistake

Jul. 12, 2017 12:06 PM ETNVDA, TGS, AMD, TSLA36 Comments
Joe Younger profile picture
Joe Younger


  • Over-exuberance, jealousy, and greed lead to overextended entry points.
  • Overextended entry points often result in days or weeks of "dead money."
  • Worse yet, overextended entry points often quickly become "underwater," causing many investors to lose confidence and sell at a loss.

The other day, while perusing some twenty-year charts and mentally kicking myself (what could have been, Apple (NASDAQ: AAPL) , what could have been...), it suddenly dawned on me that I've been investing for over twenty years. I've read a veritable library of books on fundamental and technical analysis (from PEG ratios to Gravestone Doji patterns), I've enjoyed the blissful rise of bull markets and suffered through ulcer-inducing bear market crashes, and doggone it, for twenty years I've been making the same [insert swear word of choice] mistakes over and over again! These beguiling, seemingly simple errors have taken a huge bite out of my profits over the years; indeed, without them I would probably be floating on my yacht, drinking an umbrella-adorned cocktail right now. Let's examine my most common investing mistake, with the hope of avoiding it in the future.

Overextended Entry Points

Without a doubt, my most common and frustrating mistake investing mistake is entering a stock that is overextended. The stock symbols have been different over the years, but the recipe for disaster is always the same. First, I come across a stock that has had an amazing run, one that has shot out of a base formation like the proverbial rocket and is climbing spectacularly. Greed and jealously bubble up in my veins. "How could I miss this stock," I say to myself. "Look at that amazing run!" Then, I research the company and learn its beguiling story. It's making an innovative new product or offering a revolutionary service. My heartbeat quickens. And then, I take a look at the fundamentals, and they are tremendous. Sales growing exponentially, earnings per share increasing rapidly, etc., etc.. I take a look at the chart. The price is well above its 50-day average, and its steady uptrend is starting to go parabolic.

This article was written by

Joe Younger profile picture
I began investing in the late 90s, when I purchased a few shares of Apple. The shares took off without me--I sold a few months later for what I thought was a shrewd profit--but I was hooked, and I have been researching companies and investing in stocks ever since. I am an avid believer in combining technical analysis and fundamental research, and I have been studying chart reading and researching companies for over twenty years. My technical analysis hero is Thomas Bulkowski, and I find inspiration and guidance in the books of William O'Neil. I grew up in Montana and currently live in Washington State. My goal is financial independence, so that I may devote more time to the cherished things in my life: family, the great outdoors, auto restoration, and investing.Please read my Investment Strategy Statement for a detailed overview of my investing process. I discuss my areas of focus, my three-pronged evaluation system, risk management, and several other facets of my overall investment strategy.I have a YouTube channel called Joe's Investment Express. It focuses on technical and fundamental analysis of growth stocks and general investment strategy. You can find it here: https://www.youtube.com/channel/UCpaH3mlmfF1_Z9E1OqtmkAg

Analyst’s Disclosure: I am/we are long NVDA, TGS. I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it (other than from Seeking Alpha). I have no business relationship with any company whose stock is mentioned in this article.

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