Opportunity In The Stock Market?

The story ....

Once upon a time, there was a young man who wanted to be rich and successful. He climbed up the mountain near his village to ask the monk who had been meditating at the top of the mountain all his life. The young man thought that since the monk was a very wise man, the monk could definitely help him to find the secret of success.

The monk told the young man that actually there was a magical stone called the Touchstone, which could grant the wish of whoever made a wish while holding it. The monk also told the young man that the touchstone was on the beach just at the foot of the mountain. It laid there among thousands of other normal stones. And the young man could differentiate the touchstone from other stones by its temperature. The touchstone was warm, much warmer than the normal stones.

And so, the young man set his course to the beach. He found out that there was really thousands of stones by the beach. Believing that one of the stones was the touchstone, he began his search.

He picked up one stone, felt that it was cold, then threw it away to the sea. This way, he could make sure that he would not pick up the same stone twice.

Days and weeks passed and the young man had not given up hope yet. He still kept on picking up stones, one-by-one, and as long as it was cold, he would throw the stone into the sea.

One day, he picked up a stone that felt warmer than the other stones. But guess what did he did? Unfortunately, having gone the same motion of picking up and throwing away stones for months, he got used to throwing away any stone that he picked up. And so, unintentionally, he threw the touchstone into the sea.

It's sad story, isn't it?

Createwealth8888:

How is the moral of the story related to the stocks?

The stones at the beach are the stocks that we are actively trading (picking up and throwing back to the sea - buy and sell) in the market and the Touchstone is the the base stock to build up a potential Pillow Stock.

When do I recognize it is a base stock? It is warmer than the earlier buys. The buy price never look back after buying is telling me that it is much warmer than other buy prices and may have pick up a touchstone.

But, if you have the habits of picking up and throwing back the stones to the sea and you will never ever find the touchstone. Believe it or not!