Two utmost important rules: A stock which keeps rising is a good stock no matter how bad it seems fundamentally. A stock which keeps falling is a bad stock no matter how good it seems fundamentally.
----------------------------------------------------------- I thought I would bump this up again just to say that I also agree with xxxskier... He said it fairly well. Gotta be early and have more coming to the party after you get in. I base my views on what I've learned since I started trading and investing about 44 years ago. ag
This is a great rule for traders, but not so much for long term investors. A stock that keeps rising even though fundamentally it's wearing the Emperor's New Clothes, will eventually be brought down to earth. Some examples are HOTT (5/7/09, after rising nearly 200% over 6 months to a ridiculous P/E on the success spawned by a single movie), STEC (9/17/09, following a 7-month gain of almost 1100% based on continuing sales to one large customer and a belief that somehow they'd never have competitors), and GAP (1/12/10, after rising nearly 270% over 6 months despite a complete inability to generate a profit of any kind for 6 quarters in a row and massive future loss projections).