Just to show my point that why the public is constantly feeding hard earned money to Wall Street. On July 15th, 2010, JP Morgan earnings result was released and it beat estimates. Shouldn't the price go higher instead since the news is good? If you would bought the stock on that day and hold till the next 2 days, you would be emotionally drained and depressed and wondering did they really beat estimates?
The bad news was this earnings report was already out way before the actual date on July 15th. Big operators were already buying the stock up and started to take profit on the day the news was released. The psychology was simple, the big operators knew that on that day when the news would to be released, there would be a huge load of investors, retail punters buying this stock, so it would be great if they could unload some of their holdings and cash in some profits. There is always a good old saying "buy on rumors and sell on news" and i think this saying holds very true. The price action before the news was released already factored in that the earning report will be good. You would be asking how those people know that its earnings would be good? Well, I don't really care if they know if or not, watch out for unusual activity to the price is the key. Follow the action of the big operators and you won't go wrong.
If you had lost money buying based on news, sit down and think about it. Follow effective action with quiet reflection. From the quiet reflection will come even more effective action.
Ronald K
