Do We Look At Investing The Right Way?
Probably since the day the markets opened people have been talking about them being either “overbought” or “undersold”. To be sure, only one of the two terms has any credibility and that is oversold. There is one case for this, and that is when the market is trading at zero. That is oversold! That can be contrasted when we consider the term overbought, because in reality the sky is the limit for how high any given stock could potentially rise. So this case can never really occur. So there is no such thing as overbought at all. A lot of types of stock platforms try to tell you the opposite.
I suppose people mean some kind of relative term when they speak in this way. In this manner, “overbought” translates to the market is high (higher than it was before). Conversely when they say oversold, they mean that the market is lower than before and they think the market will go higher. That’s why I decided to coin a couple new terms, to put a new perspective on the whole thing. This is really quite exciting. New ideas have that exciting effect on me. My new terms (and feel free to use them widely to get the buzz going) are “Underbought” and “Undersold”. They have actually already caught on in some places like eminiforecaster.
What is it to be “Underbought”? Quite simply, it is when the market has not raised enough to be where it will be in the future. Alternatively “undersold” means that the market has not gone down as much as it will in the future. It’s easy to see when you think about it how theses terms can replace and be a more appropriate alternative to “overbought” and “oversold”.
My goal is to move people away from looking back at the past to display where markets will go in the future. Let the past be in the past and let’s look at the future when considering things like this. In my experience the best traders are the ones that look at the value of a company now, and where it will be in the future as opposed to lamenting the past. They look for where the trend of the market is heading. They are anticipatory investors.