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Do you want to know why the market is going down this week?
You can always find a reason for why the market goes up or down. It could be good news or bad news, or good news that is really bad or bad news that is really good 🧐 It could be an earning surprise, a news story, rumor, Fed speak or some other macro happening that will seem to move the markets.
But the truth is much different.
The real reason why the markets, or individual stocks, go higher or lower has to do with one thing -- buying low and selling high. 😲
Sure, we all try to do just that, but usually get it opposite -- like buying at the highs and panic selling at the lows.
But the "smart money" players, like large institutions and funds, actually do get it right, most of the time. Meaning, when markets or stocks have made a substantial push higher, they are the ones that bought towards the start of the move -- and now that price is significantly higher, they SELL HIGH and take their profits. Their selling pushes the price lower and gets other players, and especially retail traders, to sell too. As the panic starts to pick up, the selling exhilarates 📉 until the price gets low enough...and then....guess what happens?? 🤷♂️
The smart money starts buying again! And then the price starts moving higher again...and then...here we go again! Buy low and sell high strikes again 💰
Stocks had a nice run over the past couple of months. The smart money made good money from the bottom up. Now it's time for them to take their profits and drive the stocks back down so that they can reload at the bottom and start again. Of course, they'll make some $$$ on the short side too! 😇
The only way to win consistently in the market is to be on the same side as the smart money. Buy when they're buying and sell when they're selling. These times will often be the exact times you'll want to do the opposite -- like sell when it looms like things are going to hell and buy when everything seems to be roaring like a bull 🐂
But if you can overcome your emotions and "buy low and sell high", you'll have a much better chance at being in sync with the smart smoney and winning along with them.
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This is rather beyond basic.
and yet most people, especially retail investors, either ignore it or just don't understand it. But you're right, it's as basic as it gets!