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Originally Posted by Monk
The numbers very often don't 'justify' the valuation....... so what? You can say that about almost any stock that goes into bull mode. The question is whether the stock will go up or not.
Follow the charts and jump in on bulls and get short on bears.
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Hey, great advice! Buy low, sell high! I never thought to try that! Since I know when the bulls and bears are coming, this should be a SNAP!
If you can't justify the valuation, then you are not "investing."
The better able you are to justify the valuation, the more likely a stock will increase in value. Sure, sometimes investors drive up the price of a particular stock based on expectation and excitement, but the stock price will always corrects itself. Nothing can stay overpriced forever. If you invest in a company knowing that the current stock price is valued at a potential future value (based on expected earnings, etc.) you are asking for a beat down. You just gave someone else a bank full of money while you hope beyond hope that you can fool the next buyer into paying more than you did.
Again, I say, it could happen . . . it is just not a very smart thing to do.