I don’t understand the stock market.

I realize that sell-offs and profit-taking are as old as the market itself, but it amazes me with which the frequency stock owners will sell on good earnings. In the last week, both APple and Microsoft have announced INSANELY good earnings. They beat market estimates in most every metric available. And both show no signs of slowing down. Apple’s earnings didn’t include the huge debut of the iPhone 4 and Microsoft is only starting to get momentum with upgrades in the enterprise space. So while I realize these big earnings present a chance for people who bought at lower levels to take some cash off the table, and for every seller there is a buyer, I’m shocked that the stocks don’t spike higher in the short-term as buy-and-hold players take a piece of the pie. (Perhaps that’s because the buy-and-hold folks already own the stock?)

Regardless, while it seems logical to sell at the peak it seems illogical to sell on the way up. I’m sure traders would say the opposite is true and that trying to predict the peak is a loser’s game. I guess that’s why I’m not a stock trader.


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