Trap for Investors (2) - 暗渡陈仓

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Traps for Investors (Part 1)

One of the mostly used trap to trick the investors is called 暗渡陈仓. Basically, it means to deceive the enemy with an obvious approach that will take a very long time, while surprising him by taking a shortcut and sneak up to him. As the enemy concentrates on the decoy, he will miss you sneaking up to him.

Here is how it normally work in the stock market:--

When the news talk about the market direction, it usually reports on a few indices...
Such as the Dow Jones Industrial Index, Nikkei 225, Hang Seng Index etc...

And, in actual fact, these Major indices are representing very very minor number of stocks in their respective market...

For example, Dow Jones Industrial consist of only 30 stocks out of a few thousands stock in the US market, and usually those key indices normally consist of higher price stocks.

So, when the manipulators would like to distribute their stocks at the high price, especially the poor quality and low price stocks... They can focus in pushing up some index stocks and with the help of the media to broadcast that the market is keep moving up... While some untrained public would prefer to buy some lower price stocks for what ever reasons... Then they would fall into the traps...

That's why some time people may wonder, why the market keep moving up while the stocks that they owned does not move. It need to look into more details... such as which sector is now moving up or down, what kind of capitalization (Large, Mid, or Small) stocks is leading, etc...

Most people heard of the phrase that "Knowledge is Power". The fact

is that Knowledge isn't power, it is just a potential power.

IMPLEMENTATION of knowledge is the POWER.

- Unknown