I learned something this week.

Actually, I relearned something.

If only I remembered it a few months ago… I’d be $20,000 richer today.

Tis investing, I guess…

The lesson I learned goes along with the theme of “Stocks move in and out of favor” that I’ve been writing about recently.

Over my investing career I’ve seen this pattern play out repeatedly.

Recent trends in quantum computing and space exploration stocks offer a prime example of this.

When major announcements hit the news, stocks in those sectors often experience dramatic spikes.

When Google announced its Willow quantum computing chip, investors rushed into quantum-related stocks, sending prices soaring.

Similarly, space stocks have seen repeated surges whenever significant developments occur, like when President Trump renewed discussions about Mars exploration a few days ago.

In these moments, investors become convinced that they must buy in immediately or risk missing out.

However, these surges are often short-lived.

Once the initial media buzz fades, reality sets in. Investors begin to question the long-term viability of these companies, and stock prices retreat just as quickly as they climbed.

The market’s attention shifts elsewhere, and those who bought in at the peak are often left holding losses.

This cycle of hype and disappointment repeats itself across industries, particularly in sectors driven by innovation and future potential rather than immediate profitability.

Yet, this pattern doesn’t only apply to speculative stocks.

Just as stocks can become overhyped, they can also fall out of favor for extended periods before making surprising comebacks.

A great example is United Airlines (UAL).

For years, airline stocks like United were shunned by investors, weighed down by pandemic struggles and concerns over travel demand.

However, in the last seven months United Airlines has surged 160%, making it the best performing stock in the S&P 500 over that time horizon.

The shift in sentiment was driven by stronger-than-expected financial performance, increased travel demand, and renewed investor confidence.

This turnaround underscores how media and investor attention can work both ways – what is unloved today can become the market’s favorite tomorrow.

For investors, understanding these cycles is crucial.

Chasing hype-driven stocks at their peak often leads to disappointment, while ignoring out-of-favor stocks can mean missing out on substantial gains when sentiment shifts.

The latter is how I missed out on $20,000.

I bought United Airlines at $35 based on its incredibly cheap valuation and high growth forecasts at the time. My plan was to hold the stock long-term.

Unfortunately, I didn’t have the patience to wait for the stock to come back into favor with investors. (You know I prefer quick options strategies.)

I sold for a small profit when the stock reached $40, missing out on $20,000 in gains now that the stock is over $100.

Ultimately, markets are driven by emotion as much as fundamentals.

By staying aware of how media attention and investor sentiment influence stock prices, you can better navigate these cycles and position yourselves for long-term success.

I forgot this lesson for a bit, but I won’t next time.

Tis investing…