Knee Jerks Are Dangerous

One of the things I have always prided myself as a trader is being able to stay rational when emotions take over for others on a stock, sector or even the market itself.

So many times investors react to a one-time event to drive a stock way down past its intrinsic or fundamental value. A perfect recent case of this is the bull call option spreads I initiated when Herbalife (HLF) got driven down below $30 a share on the announcement that notable money manager Bill Ackman has taken a large short position on the equity. The company had been operating the same way for decades, so his comparison to their multi-level marketing model as a "Ponzi Scheme" simply did not hold water for me....445 more words left in this article. To read them, just click below and try Real Money FREE for 14 days.

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