December 15th, 2015

How to Avoid the Market's Stimulus "Kodak Moment" and What to Do Instead

Back in my college days as a chemical engineering student, I found myself driving down to Kingsport, Tenn. I was due to start a cooperative education job at the Eastman Kodak chemical plant there. I remember looking at the biggest chemical plant in the world with awe (13,000-plus employees at the time). Kodak sold off its chemical business - now Eastman Chemical - in 1994. This former employer of mine has been in the news a lot lately. Through a $765 million loan from the Trump administration, it was set to revive the U.S. pharmaceutical industry. As the news hit and the Robinhood trading crowd piled in, shares soared from $2 to more than $60 in two short days. Hope and optimism ruled. A few days later, reality set in. The stock cratered. It's now around $10 and trending down. This is an example of what we in the trading world call "Buy the Rumor, Sell the News." When a rumor first hits the news feeds, it creates excitement and optimism. Stocks rise, and other traders don't want to miss out. But things are rarely as rosy as they look at first glance. Once reality sets in, excitement gives way to reason. People start looking into the actual details of the matter. And more often than not, it turns out that in their excitement, traders overshot. Kodak's pharmaceutical loan was one example. But that's small potatoes compared to what's coming next. Kodak was just one company. This time, stock markets as a whole could be in for a "sell the news" moment. That's why today, I'm going to show you how to avoid the hype and what to do instead to come out on top... Full Story The post How to Avoid the Market's Stimulus "Kodak Moment" and What to Do Instead appeared first on Money Morning - We Make Investing Profitable . This time, stock markets as a whole could be in for a "sell the news" moment. That's why today, I'm going to show you how to avoid the hype and what to do instead to come out on top... To get full access to all Money Morning content, click here About Money Morning: Money Morning gives you access to a team of ten market experts with more than 250 years of combined investing experience – for free . Our experts – who have appeared on FOXBusiness, CNBC, NPR, and BloombergTV – deliver daily investing tips and stock picks, provide analysis with actions to take, and answer your biggest market questions. Our goal is to help our millions of e-newsletter subscribers and Moneymorning.com visitors become smarter, more confident investors. Disclaimer: © 2020 Money Morning and Money Map Press. All Rights Reserved. Protected by copyright of the United States and international treaties. Any reproduction, copying, or redistribution (electronic or otherwise, including the world wide web), of content from this webpage, in whole or in part, is strictly prohibited without the express written permission of Money Morning. 16 W. Madison St. Baltimore, MD, 21201.
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