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Pro Analysis

Paul Meeks: Run for the hills when this happens

Paul Meeks
Source: CNBC

I traffic in tech stocks. When they're good they're very good, but when they're bad, well, you know. Occupational hazard. I've learned lessons over the years and I have lashes on my back to prove it.

Academics tell you that the market is efficient, which means that a stock's price reflects all available information. I've been an adjunct finance professor since 2005 — I'm currently at Western Washington University — and I think that the efficient market theory is garbage.

Therefore, I suggest that you develop a sell discipline that forces you to dump stocks under certain conditions. "Discipline" means that it's a dispassionate, objective measure. Fall in love with your partner, your favorite sports team, or whatever else, but not your investments. This is particularly necessary for volatile stocks like those in tech.