AMC stock is blasting off like a rocket ship again.
It had a high of $29.76 on Thursday during regular trading hours after opening the week four days ago at a price of $12.38. For anyone who owned that stock at the beginning of the week, their money doubled in less than a week.
If you’re standing on the sidelines and want a piece of the action, you might be filled with all sorts of questions, like these:
Since AMC has already gone up so far, does that mean it’s out of gas now?
Could AMC go down as fast as it came up?
Why exactly did AMC go up so fast, and how do I know if it will keep going up?
These are great questions that might be impossible to know the answers to. One big challenge is that AMC has turned into a “hype” stock. Together with GameStop, these two stocks are the face of hype stocks in 2021.
And with hype stocks, there’s just no telling how far they’ll go up or how far they’ll fall. It’s because the stock valuation is being based almost entirely on hype.
It’s just like the old “pump and dumps”, where an entity with a vested interest in a stock would hype it up and drive up the price. Then once that entity locked in their profit, the hype would disappear, the demand for the stock would die, and the price would implode.
In the case of the pump and dumps, if you were one of the people who bought the hype and were left owning the stock after the price imploded, you were considered a bag holder. You held the stock as it died, perhaps hoping it would somehow come back. If it’s ever happened to you, then you know how much it stings to be a bag holder.
People who are considering buying AMC right now are facing that same risk of holding the bag.
What’s interesting about AMC is that we all KNOW this is a hype stock. It’s not like we’re being fooled by a pump and dump schemer in some way. We’re fully aware that this is pure hype. Yet there is still an allure to getting in on the action, and for most people that’s because the thought of making money in the stock market sounds fantastic.
If your goal is to make some money in the stock market, why take a blind gamble on a stock that’s all but sure to implode shortly? You don’t have to take blind risks like that. There are proven edges in the stock market that you can take advantage of so that you can have the odds in your favor when you make trades.
Mindful Trader offers a trading service that capitalizes on a back-tested edge in the market. The guy who runs it is a Stanford grad who did quantitative research on stock market price tendencies. He found a trading strategy that had remarkable returns in the back tests he ran. Subscribers can follow his trades, or they can learn his trading strategy and do it on their own.
With each stock pick published by Mindful Trader, there are a lot of specifics offered: a profit target, a stoploss, and a length of time for being in the trade. There is no guesswork needed.
Taking blind risks is not necessary in the stock market. And neither is the pain that comes with being a bag holder. There are sure to be people who make money on AMC, but there are also sure to be people who lose money and are left holding the bag.
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