People are stupid sheep… take advantage of it.

[Please note I started this post, forgot about it for 2 weeks then finished it today]
While I'm sure there is a lot of topics I could write about, and maybe ill make a series of it. Today I'm talking particularly about how to use their stupid to make money in short term investments.

The best way to explain why it works is through example. This morning General Motors announced a bunch of stuff including how they are getting rid of a bunch white collar jobs and their plans to raise money and what not. Approximate stock price at 8:30 am, the time of announcements, $9.50. Now of course some people start running around like chickens with their heads cut off screaming it’s the end of GM, others see them and follow suit, before you know it the stock price is at its lowest point in 54 years at 10 am at about 8.98. Finally someone them get tired or running around freaking out and start thinking wait a minute, maybe we over reacted a bit, and the stock ends the day at around $10. Now I don’t know how the hell it managed to close above its opening price today, but that’s not the point. The point is there’s a clear and easy method to follow here.

1) Listen for bad News
2) Give people time to act like stupid sheep and stock to fall
3) BUY
4) Wait until price raises again, could take a couple of hours or a couple of days or whatever
5) SELL

Using this method with GM today you could of made about 18% gains in 1 day.
Not convinced yet? What about oil, this frigging happens like every week, except its kind of like the opposite.

1) Wait until theres been very little news about oil and conflict in the middle east for a couple of days (price falls)
2) BUY
3) Something blows up in the middle east…again
4) Give people time to act like stupid sheep (price of oil rises)
5) SELL
6) People will realize they over reacted for the 5th time this month and within a couple of days prices will be back to normal

Of coarse this doesn’t work all the time. This is the great thing about taking a couple weeks to write this post because a counter example is in the process of happening. In the past week or so oil has taken a pretty big dip. Following my method it would have been very easy to put some money into oil after it dropped $5 in one day then plan for it to go back up tomorrow just to have it fall a lot more like it has. No plan is perfect…

Anyways if you follow my advice without thinking it through / practicing with fake money first to see if it works for you you’re either an idiot or recognize genius when you read it, that’s my disclaimer.

When I get closer to actually attempting to apply this strategy ill practice first to see if I actually have any skill at it, ill let you know how it goes.