Tuesday, October 22, 2013

The Daily Note - Icahn, You Can ~ $NFLX ~ Riding on Icahn's Coattails

*****Warning! I'm going to say it like it is! I always have said it like I see it,  but today the gloves come off.. well just a bit. No apologies. I see the streams full of Icahn bashing for cashin' . Come on traders! Can one of you say you'd hold through $389 when you bought at $58?  Many of you would cash at $389 buying at $358. I bet you many did.

The point that this is the free markets. Unforgiving real life free markets. It's not your Mammy or Dada holding your hand free markets, although many of you think you'll be safe if only the government would put in more regulations. Regulations make markets more volatile or haven't you seen history? More on that later.

So Icahn sold much of his shares in $NFLX, my my, you forgot perhaps that his money helped make the company also that you could invest in yourself at much lower share base? That's how it works. Someone takes the "bigbucks" chance that a company will do well. We ride their coattails. Media hypes it by announcing about the "bigbucks" investors and their views. We chase it.

The burning question for you is, how much homework did you do before you chased it, trashed or cheered it?  We can trade along the direction of the market as we see fit and trade against it as we see fit. If we pick the wrong way, we suffer the consequences. If we don't do our homework and only believe someone else about the direction, we suffer the consequences.

On my blog you can still see my bullish calls throughout 2010-2011 all the way up  the previous high on $NFLX. I kept talking and instructing about the clouds on the charts until the last one dispersed and the drop was inevitable.  The drop was unforgiving as you can see it in history, which shows how much traders chase direction. (Not bragging, just bringing you up to day in case you missed it.). I also spoke of the loyal subscribers of $NFLX, including me, and how people just don't change those habits unless they are forced.

When Icahn bought $NFLX at $58 many still said it was going to $3.00 or worse.  The question becomes did traders ride on Icahn's coattails this year? Of course they did because it was a huge investment and it started the current move back up.  At the same time I doubt that it was what made it go ballistic, that "blame" lies with the traders who chased it.

So the question is not how Icahn may have screwed investors.  The question is more like did the investors and/or their advisers keep track and manage their money well?  In truly free markets, investors of all sizes have a right to make money as they have a right to preserve it also, without needing permission. Of course today with all the regulations, that's not totally the case. We have "permission" to trade the markets depending on certain rules for our "protection", but nevertheless, it's traders like us who move the markets, lucky for investors and us.

The bottom line is that traders drive stocks up by chasing and traders drive stocks down by chasing also. If you can't admit that to yourself than get out of the markets.

It's Up to You by The Jayhawks on Grooveshark

 Happy Trading, Living and Dancing,
 Anni

The Daily Pick - $NFLX



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