Chasing The Market

  

Categories: Trading, Stocks, Charts

Chasing the market is slang for impulse buying of hot stocks, or selling stocks that have shown signs of weakness. Basically, something happens and the impulsive investor thinks that something is going to keep happening. A stock rises and the market chaser starts buying, assuming the stock will keep rising. They don't look at the company's financials. They don't make an in-depth technical analysis. They just jump in, with no real logic behind it, except a specious look at what's happened recently.

In gambling, it would be like betting black because black has hit three times in a row, and black is obviously "on a hot streak." In sports, it would be a fair-weather fan. Except in the stock market, there's big money at stake.

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Finance: What is a hot issue?2 Views

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Finance allah shmoop What is ah hot issue All right

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Well it's one that has demanded more than it is

00:09

supplied One that is loved more than it is hated

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One that is hot more thin it's gold Well the

00:16

most common hot issue in the press You read about

00:18

all the time Yeah It's an aipo that everybody wants

00:22

Why Well it's basically free money to the investors Price

00:27

talk has been ten to twelve dollars a share And

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well then it looks like it's moved twelve to fifteen

00:31

and out price doc's fifteen to eighteen a share And

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traders are mumbling that the first actual traded print will

00:38

be something like forty dollars a share So anyone who

00:41

buys at that eighteen dollars price or really any price

00:44

upto thirty thirty two thirty five something like that Well

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they'll make a massive return for one day's work just

00:50

flipping their stock Tio you no longer term holders I

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think about the real estate show where they flip houses

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you know Well they have to do a whole lot

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of work to flip a house on stocks are a

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lot easier Well why do hot issues even happen Well

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often banks purposely underprice i pose to quote pay the

01:08

street unquote for taking risk and buying that aipo handsomely

01:13

like they price it low Lots of people are going

01:15

to buy it have a low cost basis and remember

01:17

it fondly Well cos generally play along instead of selling

01:21

say thirty forty fifty percent of themselves to the public

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in there i po well they only sell ten percent

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and later on they'll sell more when the stock is

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popped and traded and settled and has a buying public

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and all the other good things that go with it

01:34

so and only a tiny amount of shares out there

01:36

trading even modest demand can drive prices to the sky

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and this phenomenon happens Ah lot ebay snap facebook A

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whole bunch of others essentially created hot issues by offering

01:49

very tiny fractions of ownership of themselves to the public

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in there i po so that the enormous buyer interest

01:55

almost guarantees more demand than supply of the security being

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sold and hot issues as you guess our great well 00:02:03.51 --> [endTime] until they're not

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