I suppose, just looking at BNB's chart since June 07, it's a wonder why any of us would have put money into this stock in the first place.
In retrospect buying a falling stock such as a highly geared BNB in the current financial market where credit costs are continually stressed or rising - could only be called highly optimistic or a gamble.
Too true, Roland.... I'll never understand why so many investors are so prone to buying stocks whose charts show a rapidly declining share price.
Nor do I understand why investors, having made the mistake of buying a falling stock, will stick with it for months or years while it continues to fall and lose them money.
If we want to make money from stocks, we need the price to rise after we buy them. (unless we're selling short, or using put options).
So if our investment must rise in value to make us money, surely it's just plain common sense to buy something that's rising in value right now, rather than buy a falling stock that might (or might not) rise in the future.
We can still perform our fundamental analysis if we're that way inclined, just to convince ourselves that we're buying into good solid companies. But the bottom line, in my view, is that no matter how well the fundamentals stack up, the stock
must be rising before we sink our money into it.
Coal and oil have been going higher for quite some time. Not surprisingly, my scan for uptrending stocks brings up coal and energy stock such as STO, ORG, MCC, GCL, as being star performers over the last six months or so.
Wise in hindsight? Sure, but anyone with just basic knowledge of technical analysis and chart reading could have run a software scan to find these stocks early in their uptrends. Once stocks start uptrending, they invariably make frequent brief pullbacks consisting of a few days or a week or so of falling prices, before resuming their uptrend.
Such chart patterns are easy to recognise and easy to scan for, and offer excellent buying opportunities to climb aboard these outperformes.
I no longer trade stocks - these days I find currencies to be a more lucrative trading vehicle. But in the not so distant days when I traded stocks, I used a system that was both simple and effective.
First, I'd look at sector charts to find out which sectors were the best performers. Then I'd run a computer scan on the stocks comprising those sectors. Specifically, I set up my scan criteria to find stocks that had recently begun new uptrends, but were currently pulling back temporarily against the trend.
As soon as the pullback ended and the main trend resumed, I was a buyer.
This very basic trading system would have put you into the bullish coal and energy stocks early in the piece, not long after they started booming.
Surely this would have to be a big improvement on getting into some dog like BNB that's falling lower week by week, month by month, with no indication of when (if ever) it might stop falling and start rising again.
The BNB chart brings back memories of similar charts of SGW, HIH, and PAS ....all of which went broke. Many investors kept buying these stocks as they kept falling, believing they were getting a bargain. Even the intrepid Rene Rivkin, (who I'm quite sure made his money from his newsletter subscriptions and his broking business, but not from stock trading) kept recommending PAS as a buy as its stock price kept plunging.
I have no idea whether or not BNB is headed for bankruptcy. For all I know, the company could have a change of fortunes and the stock price could start climbing impressively. If that does in fact happen (and the chart doesn't exactly inspire my confidence that it will), there'll be plenty of investors patting themselves on the back, convinced they did the right thing in sticking with BNB. Little will they realise how much money they missed out on by having their capital tied up for so long in a poorly performing company, when they could have been invested instead in some of the high-performing coal and energy growth stocks.