Former Wall Street stock trader Lance Breitstein answers your most asked stock market questions from Twitter. Why did they pick a bull and a bear to describe market conditions? What’s the driving force behind a stock’s movement up or down? How does a stock’s value actually impact a company’s well-being? When the market “crashes” why can’t it just be un-crashed? Answers to these questions and more await—it’s Stock Market Support.Lance Breitstein spent over a decade on Wall Street as Trilliums top performing stock trader. He is now a Trading Advisor to SMB Capital and non-profit founder of The Impact Competition Foundation.Linktree: https://linktr.ee/theonelancebX: https://x.com/theonelancebDirector: Lisandro Perez-ReyDirector of Photography: Constantine EconomidesEditor: Cory Stevens; Richard TrammellExpert: Lance BreitsteinLine Producer: Joseph BuscemiAssociate Producer: Brandon WhiteProduction Manager: Peter BrunetteTalent Booker: Nick SawyerCamera Operator: Christopher EustacheSound Mixer: Sean PaulsenProduction Assistant: Sonia ButtPost Production Supervisor: Christian OlguinPost Production Coordinator: Scout AlterSupervising Editor: Doug LarsenAdditional Editor: JC Scruggs; Jason MaliziaAssistant Editor: Billy Ward
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00:00I'm stock trader Lance Brightstein. Let's answer some questions from the internet.
00:03This is Stock Market Support.
00:10Conqueror Khan asks, as a trader, what is your response to the question,
00:14what do you do for a living? As cliche as it is, we're always trying to buy low and sell high.
00:19The market, especially when there's breaking news, can move so, so, so,
00:22so fast and there's no room for hesitation. If a headline comes out,
00:26company A is in talks to buy company B, that company B's share price will shoot up within
00:33seconds. So as a day trader, it's my job to try and process that headline as quick as I can.
00:39Then if I think it's going to be positive for stock B, I want to buy that stock as quickly
00:44as possible and all of this elapses in a matter of seconds.
00:48At the Vec Investor asks, when to sell a stock? A million dollar question, right?
00:53Answer, when people who are not familiar with the markets are talking about the specific stock.
00:57Well, Vivek, I actually think you have a really great point there. As a trader,
01:00we often want to be placing our bets before the euphoria, before people are super, super excited.
01:06And so often, tops in a stock really do align when investor sentiment just gets too hot.
01:12When is the worst time to sell? Generally, the worst time to sell is going to be
01:16when stock prices are falling so, so, so, so quick and you feel that panic in your stomach
01:21and all your friends are scared. In those times of panic, you really want to follow
01:25Warren Buffett's advice and do the opposite. As they say, when there's blood in the streets,
01:29that's when you want to be buying stocks.
01:31At the Finance Pilot asks, does the stock market feel like a casino to you?
01:35If you were to pick 10 random stocks for me to trade, that would be like taking me to a casino
01:41and sitting me down at a random slot machine. Over the long run, I will lose.
01:46But if I'm able to pick the specific tickers, then all of a sudden,
01:50rather than sitting at a slot machine, it's like me sitting at the poker table.
01:54And sometimes at that poker table, it might happen that I get pocket aces.
01:59And while I might get pocket aces, I can never guarantee the outcome of that hand.
02:04But what it does allow me to do is occasionally stack the odds in my favor,
02:08so that if I bet properly and play my hand right,
02:11in the long run, it allows me the chance of beating the market.
02:14At Abishak Carr asks, why do big traders use so many screens?
02:18If you've ever seen a picture of a trading floor, you know that this is absolutely true.
02:22I myself used six screens for my trading. Why do we do this?
02:26It's because we need to be glued in and cued into so many different things.
02:30So on this top left here, you'll see my watch list.
02:33That will be a list of all the stock tickers that I'm looking at that day.
02:36Every trader has their watch list. As part of their preparation for the day,
02:41they decide what stocks they want to look at,
02:43so that they're really cued in to how their prices are changing over time.
02:47Right here, that box is the live news.
02:49It feeds in all the news headlines on a specific stock ticker.
02:53And a lot of that news happens through a Bloomberg terminal.
02:56A Bloomberg terminal and the keyboard is one of the critical pieces of hardware
03:00that you'll see on a trader's desk.
03:02All of these color-coded keys really help you interface with the Bloomberg software.
03:06It really comes down to speed and precision,
03:09so that traders can do exactly what they need to do as quickly as possible.
03:13Right here, we have the level two box.
03:16On the left, you have all the bids.
03:18The bids are anybody out there in the world that wants to buy that specific stock.
03:23You can even see the price.
03:24Then on the right side is the ask.
03:26The ask is the price and size of every single person out there that's looking to sell the stock.
03:32When you have the price intersect, that's when a transaction occurs.
03:37When we look at this stock chart, there's a whole lot more to it.
03:40In fact, there's a whole science essentially of trading,
03:44and that subject is called technical analysis.
03:46AtCookieCokes wants to know, what is technical analysis?
03:50Technical analysis is a really big word for essentially the essence of day trading.
03:56What we have here is a chart of Tesla.
03:59This is just Tesla's stock price over time.
04:02The bars will be green when the price goes up.
04:05The bars will be red when the price goes down.
04:08When we look at this specific chart, there's a couple things we notice.
04:11First, overall, this is what I would call a strong stock.
04:15Stock prices are going up and towards the right, which means it's increasing in price.
04:19We see a little bit of a volume spike around new, and then the price spiked as well.
04:24The most volume tends to occur either at the open or the close for most stocks.
04:29That tells me that something atypical happened there.
04:32I suspect it's very likely that a piece of news occurred that drove that price higher
04:36and increased all the transactions in the stock at that time.
04:40Another thing this chart tells me is we spent pretty much the whole day above that yellow line,
04:45the volume weighted average price or VWAP as us traders like to call it.
04:49It takes every single transaction that occurred in the stock,
04:53it multiplies it by the price,
04:55and you get essentially the average price based on the volume that occurred there.
04:59A lot of traders like to think that if a stock is trading above that VWAP line,
05:03that's a bullish signal.
05:05In other words, we suspect that the trend might continue higher.
05:08If a stock is trading below VWAP, we take that as a bearish signal.
05:12In other words, we interpret that as the stock might continue to head lower.
05:20For the most part, you really want to invest for a long horizon
05:24because over time, the stock market does tend to go up.
05:27However, as a trader, we take a much different approach.
05:30As a day trader, I really want to stick to stocks in play.
05:34What does that mean?
05:35I want to be trading the stocks with the most volatility,
05:37the biggest changes in sentiment.
05:39I want to be trading the AMCs and the GameStops when they were going crazy.
05:42I want to trade the Reddit IPO.
05:43So what happens if a stock doesn't move?
05:45Traders can't make money.
05:47So you can bet that we're really looking for the excitement
05:50and the big moves to make the big money.
05:52At Frost Ace Real wants to know,
05:54why the f**k are people buying into GameStop all of a sudden?
05:57Why do you want to invest in mid?
06:00All these meme stocks are amazing opportunities to trade
06:03and make short-term bets,
06:04as long as you have the experience to end up on the right side of it.
06:08So many people are aware of the GameStop phenomenon
06:10and the whole movement of so-called meme stocks.
06:13A meme stock is a stock where its price is largely influenced
06:18by the whims of social media and different memes online.
06:21Many might even be familiar with what happened in 2021
06:25with Keith Gill, aka Roaring Kitty,
06:28who was a financial analyst that really came to have the belief
06:32that GameStop shares were undervalued.
06:34And he almost created somewhat of a populist movement
06:38where people wanted to buy GameStop,
06:41where a lot of large hedge funds and institutions
06:43were betting against the stock price performance.
06:46It became this calling of sticking it to the trader man
06:50and sending that stock to the moon.
06:52It happened again recently,
06:54as Roaring Kitty came out on Twitter for the first time in years
06:58and tweeted a meme.
06:59And GameStop went from $10 to as high as $80 pre-market one day
07:04as a result of that tweet alone.
07:06You might have heard of friends or co-workers
07:08that have made money with bets on GameStop or AMC.
07:11What we say in stock world is what rises really fast
07:14so often comes crashing down just as fast.
07:17And we saw GameStop tumbling down back to $20.
07:20So if you're investing in making some of these trades,
07:23you can lose 100% of your capital very, very quickly.
07:26I highly advise against doing any of those crazy bets
07:30unless you are a skilled trader.
07:32At jtedscott wants to know,
07:34why did they choose barren bull to describe the market?
07:37Why not bull and scaredy cat or bull and chicken?
07:40As you can see this good old bull on my desk here,
07:42the way a bull strikes is it strikes upwards
07:45and a bull market is used to refer to a stock market
07:49when prices rise by 20% or more.
07:52On the other side though, a bear strikes downwards.
07:56And by technical definition,
07:57a bear market is when prices fall
08:00from the highs by 20% or more.
08:02An example of a bear market is what we saw
08:04during the great recession in 2008.
08:06And even what we saw during the early stages of COVID
08:10in spring 2020, when markets fell precipitously
08:13to try and price in the risk
08:15of COVID spreading around the world.
08:17At flybry wants to know,
08:19what is the Warren Buffett secret to success?
08:22I think many people have heard of Warren Buffett
08:24and it's because he really has
08:27one of the best track records of investing of all time.
08:30He is invested through every market cycle imaginable,
08:34every boom, every bust,
08:36that knowledge and the hours he spends
08:38pouring over financial statements
08:40allows him to have an informational
08:42and a psychological advantage over the rest of the market.
08:45It's the average person out there
08:46and wants to follow Warren Buffett style investing advice.
08:50Index funds are often the way to go.
08:52You want to invest for the long run.
08:54You want to buy more when others are fearful
08:56and you wanna have the long time horizon
08:58and capture the growth and success
09:00of the American economy as a whole.
09:02At Mitesh Anger asks,
09:04what is the driving force for a stock to move?
09:07The stock price and what causes it to move
09:09is simply whatever people are willing to buy
09:11and sell a stock for.
09:12What people need to realize is so often
09:14stock prices don't reflect the true economy,
09:17but perceptions of where the future economy is going to go.
09:20Let's take a case study.
09:22Everyone out there has heard about this huge AI boom.
09:24So who will be some of the beneficiaries from this AI boom?
09:27One of them is Nvidia,
09:29which is making a lot of these chips.
09:31So if you were to look at the share price of Nvidia,
09:33you're going to see that over the last couple of years,
09:35it has just absolutely exploded.
09:37They're creating so many of the chips
09:39that powers this AI boom.
09:41A lot of investors want to participate
09:43in what they view to be the future
09:45of growth and innovation.
09:46How many chips will they sell?
09:47What will the profit margins for this company be?
09:50And what are we willing to pay for it today
09:52to compensate for those unknowns?
09:54That is what the stock market really does.
09:56At Viv Bajaj asks,
09:58do you trade stocks based on news?
10:00Yes, yes, and yes.
10:02Part of our job as traders is to figure out
10:05what are the implications of that news?
10:07And then what does it do to the stock price?
10:09At the start of the war in Ukraine,
10:11we saw investors rightfully start to panic
10:14due to the increased geopolitical risk.
10:16On one of those days, Tesla sold off
10:18along with the rest of the stock market.
10:20But then what happened is later in the day,
10:22when some of the fears settled,
10:23people started to buy Tesla on the second implication,
10:26which is if oil prices shoot higher,
10:29what might the implications be
10:30for electric vehicle adoption over time
10:32and the prospects of Tesla as a company?
10:34At Angelo Terzo 2 wants to know,
10:37is the trend really your friend?
10:39I would say a resounding yes.
10:41It is so, so, so important to stay with the trend.
10:45One way that I like to illustrate this point
10:47is what I like to call the right side of the V.
10:50Even though A and B are at the same price,
10:52I wanna be on the right side of the V
10:55because this green line is a stock price
10:57going down, down, down, down, down.
10:59And at point A, when we're at $50,
11:02you still don't know how far that stock
11:04might still have to fall.
11:05For all we know, it could go to 40 or 30 or 20.
11:08That's why it's so much better to buy
11:10at the right side of the V.
11:11When you're with the trend,
11:12that tends to have higher expected value
11:15because now that we're with the trend
11:16and these trends tend to continue,
11:18that puts the odds much more in our favor
11:20and it's a way safer way to invest or trade.
11:23At Matt Ryan X wants to know,
11:25okay, wait, a real stock market question.
11:27How does the stock of a company in any way
11:29actually impact the company and its wellbeing?
11:32When a stock goes public for the first time,
11:34that's called the IPO or initial public offering.
11:36So whatever that IPO price is at,
11:39that's actually the proceeds that the company will get.
11:42So if the company were to sell 1,000 shares at $100,
11:45they would be raising 100,000 bucks.
11:47But if that stock then went up way, way higher
11:50after that IPO,
11:51they actually wouldn't directly benefit from that.
11:54While the day-to-day price of the stock
11:56doesn't directly influence a company,
11:59a lot of the shareholders might own some of the stock.
12:01So this can have implications for morale
12:04and also just corporate funding decisions
12:06like whether to raise money through debt,
12:09essentially issue bonds,
12:10or raise money through equity by selling stock.
12:13At Rishabh Midas asks,
12:15why top stocks are called blue chip?
12:17The term blue chips comes from the fact that
12:19back in the day when people were playing poker,
12:21the most expensive chips were the blue chips.
12:23That term was then adapted to refer to stocks
12:26that were some of the biggest,
12:28most profitable, stable, and respected companies
12:30in the economy.
12:31In the US, we traditionally referred to blue chip stocks
12:34like GE or Ford or General Motors.
12:37But nowadays it's a different guard
12:39made up of companies like Apple, Microsoft, and Nvidia.
12:43At Murphy wants to know,
12:45so I'm rewatching the Wolf of Wall Street.
12:47Any economics nerds on here
12:48know how accurate it actually is.
12:51It's definitely a classic.
12:53That is the true story of Jordan Belfort.
12:55What he was a part of
12:56is what's called a pump and dump scheme.
12:58People back then and still to some degree today
13:01buy stocks for themselves and their company,
13:04then try to pump the stock price up,
13:07promote the stock and push up the price
13:09and make a lot of exaggerations to potential investors
13:12that will get them to buy the stock
13:15at a much higher price than you bought it for.
13:17Creating all this excitement and almost false narrative
13:20to suck people into buying the stock that you have
13:23with a huge conflict of interest
13:25and that you're often selling it to them at a higher price.
13:28At keep quizzing wants to know,
13:29what are some stocks that can give 1000% returns
13:32in the next three years?
13:33A lot of people in the stock market world,
13:36especially with Instagram and TikTok,
13:38they're going to promise you things
13:39that are totally, totally impossible.
13:41Much like poker, this is a probabilistic game.
13:44I can identify situations that are in my favor,
13:46but never ever would I be able to promise anyone anything like,
13:50oh, this stock will return 100%
13:52or let alone 1000% in a couple of years.
13:54Anybody that's making these dramatized claims,
13:57a lot of that is not only not true,
13:59but some of it might even be illegal.
14:01At chefboyrdj underscore asks,
14:05how does the stock market crash?
14:07Just uncrash it?
14:08If only it were that easy.
14:09But as to why the stock market crashes,
14:11it's because sometimes there's sudden events
14:14that results in this feedback loop
14:15where so many people want to go for the exit all at once.
14:18We have an expression in trader world.
14:20It's okay to panic as long as you're going to be
14:22the first person out the door.
14:23But if everybody's already exited
14:25and prices have dropped precipitously,
14:28then it's just too late
14:29and you often are better off sitting tight.
14:31One example of probably the biggest stock market crash
14:34is October 19th, 1987, Black Monday.
14:37The stock market fell a whopping 22% in a single day.
14:42That is almost unfathomable for me to imagine.
14:45At volt trader wants to know,
14:47what can emotional trading or psychological pressure
14:49due to your trading in the financial market?
14:52The reality of being a trader
14:53is that it is one of the most emotionally
14:55and psychologically challenging jobs out there.
14:58So often the average layman will be selling
15:01during the panics when we want to be buying.
15:03So what a pro trader does is
15:04we override those base level emotions
15:07and we try to buy when people panic
15:09and then sell when people get euphoric.
15:11Here's a scene from Billions.
15:12I really love that portrays this topic well.
15:14You got to be able to withstand the pressure
15:16or it'll crush you.
15:17Here in this scene, he's saying,
15:18I don't lie to myself.
15:20I don't hold on to a loser.
15:21I let it go, get away from it.
15:23If you have years or decades of experience,
15:27your intuition is actually giving you
15:29very useful knowledge,
15:30telling you that something is not acting right.
15:32And when that happens,
15:33I try to always listen to my intuition.
15:36At Slimerella says,
15:37I'm gonna be real for a sec.
15:38I have absolutely no idea
15:40how the New York Stock Exchange works.
15:41Like I don't get why everyone
15:43is just running around yelling in earpieces.
15:45I just feel like there's a more calm way
15:47we can tackle this.
15:48I totally agree, Slimerella.
15:50And a lot of that craziness
15:51and the running around
15:52and the screaming and yelling
15:53has actually gone the way of the past.
15:55Yes, some floor trading does still exist.
15:58The New York Stock Exchange
15:59still has their floor
16:00and their different areas
16:01for some of the different stocks.
16:02But the overwhelming majority of stock trading
16:06is all done through electronic trading,
16:08using software and the internet.
16:10That being said,
16:11it is true that when you see those people
16:13yelling and screaming,
16:14a lot of those people are taking in orders,
16:16some still by phone even,
16:18and they're trying to process them
16:19through the system
16:20to eventually find the best way
16:22to place them in the market
16:23and get the best pricing for their client.
16:25At Perceptive Trader asks,
16:27what sets apart pro traders from amateurs?
16:30The difference between elite and amateur is massive.
16:34A lot of what a trader succeeds at
16:36is pattern recognition.
16:38The more experience you have,
16:39you can notice all these nuances
16:41that an amateur doesn't stand a chance at noticing.
16:44The same way that Tom Brady
16:45can read a defense
16:46and know where people are going to move
16:48before they do it,
16:49it's that difference
16:50versus being a high school quarterback.
16:52So those are all the questions for today.
16:54Investing always involves risk.
16:56So do your own research
16:58or consult a financial advisor
16:59before making any investment decisions.
17:02Thanks for watching Stock Market Support.