Last week, I talked to a friend of mine who’s starting to get interested in investing. He’s a bit unusual in that he has $80,000 sitting around in a savings account earning 0.5% interest (here’s a referral to the better savings account I use)l) and has some slightly wacky ideas about investing. For example:
- “I don’t plan to invest in my 401(k)…I always thought that’s for people who just want to get rich over 50 years, like old-style investing.”
- “I want to buy stocks. I know technology, so I really want to buy tech stocks.”
To this I replied, “Really? Which stocks?” He said, “Netflix–I think it’s going way up.”
If you’re a huge dork and read daily investment recommendations for fun, you’ll know why this is significant: Netflix shares jumped 20% last week on rumors of a buyout from Amazon.com.
Now, the fun part.
Previously, I wrote about market timing and why it is incredibly stupid. As you can imagine, I spent a lot of the conversation screaming at him, telling him not to buy individual stocks at first, get educated by just reading some good books for a month, and trying to correct interesting (“CRAZY”) ideas about getting rich. Fortunately for me, I just found something that made me prance with glee. Yeah, I said it.
Subject of email I sent to him: See what happens if you try to time the market?
“Rumors of a buyout deal with online retail giant Amazon.com pumped up Netflix’s shares last week. The stock nearly reached the $26 mark last Wednesday — its highest level in six months and up more than 20% in two days.
This week, the shares have given up that premium. Shares of Los Gatos, Calif.-based Netflix (NFLX, Trade ) dropped under the $20 mark Wednesday, hitting their lowest price since August of last year. Over the past three days, the stock has lost more than 18% as analysts from J.P. Morgan and Citigroup have downgraded the shares on concern about fresh competition from Blockbuster Inc.”
Don’t try to time the market!!!
That is from a news release today by Dan Gallagher, which leaves me wiping my hands in complete and utter satisfaction. PLEASE READ FOR AT LEAST 20 MINUTES BEFORE YOU GO INVESTING ALL YOUR MONEY IN SOMETHING. AJKSNFKANKGNASGJK
PS–This site will look different tomorrow