Someone is always left holding the bag. This is the same concept as the oft quoted patsy at the poker table.
If you invest late into trends then you have a higher probability of being that patsy.
People investing late in trends should examine if they suffer from herd mentality, confirmation bias etc. While numerous studies show momentum strategies are successful, all those strategies attempt to identify major trends early on. One of the most basis the death cross of the 50dMA crossing below the 200day shows when getting on board this …

Investing is all about probabilities, the probability of reward versus risk. It doesn’t mater whether you’re a value, growth, fundamental or technical trader or investor you should be using probabilities to help you be a better investor. I use the Kelly Formula for comparative analysis of my portfolio and new opportunities and will discuss that in depth another day. Today I’d like to focus on short term probabilities. If you sit firmly and unflinchingly in the long term buy to hold camp then move along there is nothing for you …

I love it when a good plan works out.
I posted an American Reprographics (ARP) Q1 preview, which I’ve included below, on The Motley Fool ARP board back on April 25th. In summary I calculated the upside and downside targets and odds, then based on the probabilities decided to hold through earnings. This is an important skill for active investors to cultivate as investing is all about probabilities for risk versus reward.
ARP certainly surprised me with the strength of their earnings and now I have to consider whether to sell. My …