When I was a kid one of my favorite book series was Encyclopedia Brown. I found the stories wildly entertaining. Encyclopedia Brown always solved the case, no matter the difficulty or circumstance. I wanted to be just like him. I bought a magnifying glass and carried it everywhere along with a small notepad to write down my findings.
Fast forward 15 years and lo and behold I am a detective of sorts.
As traders we are all detectives seeking clues. Day by day we compile evidence either supporting or undermining the bullish or bearish argument. Over the course of time stock prices leave clues in their wake revealing much about the underlying health of the market. Some clues are hidden in plain sight. Others are masked from all but the slyest of detectives.
The type of tools used and clues sought will differ from trader to trader. Some hold technical analysis in high esteem; others rely heavily on fundamentals and the bevy of metrics that accompany it. Some turn to volatility and standard deviations while others settle on seasonality.
Unfortunately the discovering of hidden clues never leads to an assured outcome. The revelation process goes as far as discovering an edge, but falls short of finding certainty. Certainty in the markets is ever elusive. Even the savviest sleuths fail to find it.
For related posts, readers can check out:
The Two-Handed Economist
The Growth/Income Paradigm
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Hey Tyler, what’s your take on these “social” IPOs…
Hey Kirk. Honestly it’s completely out of my wheelhouse. I know zilch about valuing a company and an IPO. As a result I’ve always waited a few months to allow IPOs to establish some price history – trend, support/resistance, momentum, etc… That way I at least have some reference points to go off of. So from a trading standpoint I choose not to participate yet.
I do think it will be interesting to have the ability to trade these “social’ companies and see what type of traction they gain post IPO, but have no personal insight as to how things play out.
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