[mcv]

Of course. Always check if something changed about the company itself.

And when trading derivatives, even dips caused by the market (rather than fundamentals), can lose you lots of real money. Because even if it will eventually recover, it might dip deeper and longer than you can afford. I lost a ton of money on Tesla that way. (I would have been rich now if I'd been able to keep that.)

[jrochkind1]

Did something change about the company itself in the dips and bumps you just described buying and selling Gamestop at above?

[mcv]

Both Gamestop and Tesla were just the market freaking out. The market often does that. Much of the stock market is more about what other investors will do than what the companies themselves will do. It's a bunch of noise on top of the actual value of the companies themselves.

Of course sometimes it is the companies themselves, and then you need to pay attention. And because you rarely know in advance whether a dip is the company or the market, you always need to pay attention. But the Gamestop thing was a clear case of the market freaking out.

[jrochkind1]

Right. So, you were taking a risk trying to buy in the dips and sell in the bumps, you were not following your own advice to "Always check if something changed about the company itself." Which is fine, it worked out for you.

Of course, the bigger picture challenge is that -- modulo market freakouts -- everyone else is also "checking if something changed about the company itself", and that's already built into the market price, that's kind of the model of how the market works. To make money by buying in dips only after checking if something is changed in the company itself, you have to think you are better at noticing or predicting changes in the company itself than everyone else, I guess?

[mcv]

Here's the thing, though: I think most of the time it is market freakout. Even if something did change about the company, quite often the market will freak out about it in one direction or another. I really think Warren Buffett is one of the few investors who really pays attention to the actual value of companies. Most investors just sail on hype.