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OPINION

Is this Capitulation?

The opinions expressed by columnists are their own and do not necessarily represent the views of Townhall.com.
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Dreams of making millions in the stock market can come true but becomes more and more improbable because of investor psyche. There is too much trading, particularly at losses, creating the kind of gyrations we experienced last week. There are lots of reasons for this including the lingering impact of two big stock market crashes, and dare I say, the media (too many hot trading shows focused on scalping a couple bucks or stopping out simply because a stock is down).

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Last week we also saw shares of Smith and Wesson (SWHC) hit an all-time high. If you bought the stock on October 31, 2008, you would have been up 1176%. That’s a dream, and it’s a stock everyone has heard of, but the fact is today’s “investor” wouldn’t have been in for the long term ride. Take a look at that the chart- looks like an easy buy and hold. Not so.

To get to that October 31, 2008, entry point, the stock had come down 90% from its new most recent high. So it’s unlikely a lot of individual investors got into the stock, or even considered it. But, I’m sure 99% of investors would have closed positions during any of the swoons mentioned below.

Boom & Bust

Crashes in SWHC

March 2009

August 2011

-69.9%

March 2012

April 2012

-18.3%

June 2012

July 2012

-24.2%

August 2012

December 2012

-23.3%

April 2014

December 2014

-67.7%

There are a ton of stocks that are going to be multiples of 100% higher over the next few years, and even some this year, but how does an investor hang there?

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