I have noticed that a lot of people think they know what is going to happen next from looking at a chart or reading about the fundamentals. They decide what "has to" happen. The truth is that none of us knows what will happen. We guess. And the way people handle themselves when they have guessed wrong is what determines their success or failure.
95% of new traders think they will be in the 5% that win Somehow, the laws of probability are suspended when dealing with oneself.
I don't believe this is necessarily a mistake. Selling low was a winning in the latter half of 2008. Buying high is a winning strategy in a bull market. In October 2007 my husband and I wondered what the next "hot" investment would be. Solar power, of course! We researched some companies and chose JASO. We never looked at a chart or even cared what price it was trading at in relation to where it had been trading. Solar was the hot thing, we were sure of it, and he placed market orders for shares of JASO in our IRAs and in our son's small account. In less than 2 months the stock was up nearly 35%. Later, after I'd started trading, I remembered how we chose JASO based on nothing but our own sentiment and I looked at a chart and saw that we'd bought it at a new all-time high after it had already risen almost 250% from its IPO that February.
Well, that is true until the music stops, and there are not enough chairs for all. As they say, it isn't the fall off a cliff that hurts, but the sudden stop at the bottom. A lot of people who rode the late 90s, early 2000s internet/telecomm bubble were holding onto companies with this kind of profile: 8 employees, minimal sales, but valued at $100 million because they had "a great concept." The collapse in this sector was breathtaking. Few average people could have foreseen what happened during the Bear/Lehman/blowout. After all, houses kept going up in value. You could slap a coat of paint on, and flip them. You could buy a house with 3-5% down and even that could be borrowed. Etc. Today, even people with good credit and a good job may struggle getting a mortgage.
Just closed on the last business day of January (for the Obama $$). FHA is still 3.5% down. I have a 697 mid & DTI was about 28%. Not sure what you consider good credit & good job. But its not as hard as people are saying.