Last week, we reviewed five of the top 10 things investors say and do that ultimately undermine their investing success. This week, we continue the process. (For part 1 of the story, click
If you have ever said -- or even thought -- any of the following, you need to re-examine your investing philosophy:
6. 'This stock looks cheap down here.'
Any time you hear this tidbit, you can bet that either 1) the stock just got killed because of some awful news, or 2) it's in the midst of a long and relentless downtrend.
Don't confuse stock price with value. This was especially true in 2001 after all the prior splits. Sun Microsystems (SUNW) is a perfect example. Monday's closing price of $3.89 may sound inexpensive, but don't forget the five splits between 1995 and 2000; back them out, and the stock is $124.48. Same $13.25 billion dollar cap, but it doesn't sound so cheap minus the splits.Of course, some stocks do actually get cheap "down here." But it has nothing to do with the numerical price.