Definitely. If I were ever stupid enough to follow anyone blindly, it would probably be Mav's journal. 
Don and Mav, Part Deux! (Live Chat)
- Thread starter Maverick74
- Start date
I am big on fundamentals. I look for real news...preferably negative news. I then ask myself if this is something management can fix quickly. If the answer is no, I do a negative directional long term play.
When a company's stock is doing poorly, I look at the Balance Sheet, particularly the cash position and short term debt. If the stock is down, they are sitting on a pile of cash, and short term debt does not exist, I'm long term bullish.
Favorite L/T ( 6-12 months) strategies that don't require constant maintenance: OTM Butterflies.
Bob
When a company's stock is doing poorly, I look at the Balance Sheet, particularly the cash position and short term debt. If the stock is down, they are sitting on a pile of cash, and short term debt does not exist, I'm long term bullish.
Favorite L/T ( 6-12 months) strategies that don't require constant maintenance: OTM Butterflies.
Bob
Bob, I don't believe there is an edge trading off of publicly available information. Most hedge funds that are successful doing that trade off information that is not public. If everyone has it, it's not an edge.
OK, and now for a different perspective from the "Bright side" - (although I do agree about the news comment...there is nothing that we're going to learn that someone else doesn't already know).
Where my differing opinion may come into play is in regards to fundamentals and balance sheets (no Mav, not "my balance sheets" LOL).
My brother, who I respect greatly (how can you not respect someone who has made over $100 million with his own trading, never using OPM?)...is a strong supporter of fundamentals in all his trading, both short term and long term portfolio management. We spend a zillion hours really going through the details of every stock we trade, every pair relationship (fundamentally), and every sector strength (for relative strength via fundamentals).
Bob (brother Bob, of course) says that if you're going to buy a stock for a week, you shouldn't mind holding it for a year or a decade.....especially as it relates to a "peer" or a "pair". This thinking has made millions (and, yes, I thank Bob for being the one in charge of our Family LLC, where most of my money is kept, LOL...if it was up to me, most of my money might belong so someone else by now..again, LOL). When we got extremely long PVN a couple of years back, the fundamentals were great...the stock went down from around $8.00 to around $2.00 and we were "loaded up" - (not in percentage of net worth, but in number of shares ...millions of shares)...and that company turned it around and we sold out in the mid to high teens, making some good money.
Same thing with GM...we took some flack for taking a mark to market hit with GM ...only to have the money come back many times over..again, based on fundamentals.
Fundamentals are not simply a snapshot of the current financial position, but must take into account many variables..P/E et al, but also things like number of employees, the company's own business plan...their foresight (or lack thereof)...did Blockbuster get into the online video business soon enough?? That kind of thing.
Anyway, Mav and agree about the current news, but we may disagree a bit about fundamentals...probably because he trades more in the index arena (futures, etc.), and we focus a lot on individual stocks and pairs.
Note to everyone....I sincerely like to have discussions like this, with mutual respect for other ideas...as opposed to the "we're right and they're wrong" ..crap, yes, crap that we sometimes see here on ET - let's keep this tone, and maybe we can all learn something, I know I sure can.
Oh, yeah...I'm going to ask for some help on a couple of threads. I want to chat with anyone who is good at digital video editing.. a really good amateur or a professional...I need some help with a project...
all the best,
Don
Don.....I have given you a hard time over the past few years but what you posted here is the best thing that I have heard from you.
Here is the problem: 80% of most traders are traders for this reason: To make their money work for them 100% to 1000% over the next year. Now this is not scalable on 500 Million but on 100K to 500K it can work.
When you have wealth and can buy stocks and hold them for years and still have capital left over to trade and make some trading income to cover the Monthly Nut than you have best of both worlds.
You and your family are in the 99% percentile. They rest of us and most of your traders and in the bottom 50% and lack the deep pockets to take a bad TRADE and make it an INVESTMENT.
Maybe I have some envy, but you are a minority when it comes to $$$$$$ in your account.
Bob and Bright Trading has done a good job in your visionary approach.
GodSpeed.
Here is the problem: 80% of most traders are traders for this reason: To make their money work for them 100% to 1000% over the next year. Now this is not scalable on 500 Million but on 100K to 500K it can work.
When you have wealth and can buy stocks and hold them for years and still have capital left over to trade and make some trading income to cover the Monthly Nut than you have best of both worlds.
You and your family are in the 99% percentile. They rest of us and most of your traders and in the bottom 50% and lack the deep pockets to take a bad TRADE and make it an INVESTMENT.
Maybe I have some envy, but you are a minority when it comes to $$$$$$ in your account.
Bob and Bright Trading has done a good job in your visionary approach.
GodSpeed.
Mav, I've been a big fan of yours ever since I read that you said that among the mos successful traders you know were the directional traders. (Not your exact words, but close). Therefore, in looking at your answer to my last posting, I wonder why if fundamentals help me with he direction more than they do not, why is it imperative that I look for an "edge".
Thank you and Don for your comments.
Sincerely,
Bob
Thank you and Don for your comments.
Sincerely,
Bob
Don,
I'm glad you brought this up. So now people can see you and I are not in bed together doing these live chats. (Yes, some people probably thought I sold out by moving over to the darkside with you.) LOL.
I took extreme issue with your brother's trade that was featured in Trader Monthly. In my honest opinion Don, that was a horrible trade. Yes, your brother got lucky. Does that mean he was right? I don't think so. I know a lot of guys that get lucky at the casino, it's not because they are right. Sooner or later, that "buy on every dip" mentality will lead you to the poor house. No matter how much money you have behind you. Brian Hunter anyone? Nick Leeson? LTCM? No, I'm not implying he was overleveraged like those mentioned, but it's a symptom of the same disease regardless. That is, refusing to admit you are wrong when the market repeatedly says you are. Yes, your brother was able to withstand a stock that went against him by 75%!!!!!!!!!
I would argue, If Bob was a good trader, he would not have had to endure that much pain, fundamentals or not. No trader in their right mind should ever take that kind of heat. Yes, it came back. But shit man, with that reasoning every trader on ET is a genius. I mean, look at everyone trying to short this rally. Eventually they will be right. But for God's sake, when you are wrong, you are wrong. The fact that we might get a selloff in March will not vindicate those who started selling this market in October.
The idea behind trading is to make the kinds of gains your brother made WITHOUT taking that kind of risk. Shit anyone can dollar cost average a stock or a commodity until it moves there way. Many did that in the late 90's with tech stocks until they blew out in 2000. How many blew out recently buying Crude oil futures all the way down citing strong underlying fundamentals that it should go higher. How many have been shorting our index markets citing a very weak economy, war, interest rates, blah, blah, blah. Where has that gotten them?
My biggest beef Don with your brother and that Trader Monthly article is it re-enforced every bad habit a trader has. Refusing to admit you are wrong and just doubling up every tick against you until you are proven right. This is why guys blow out.
Now, I will give Bob credit for one thing. He at least is doing this with his own money and not running OPM and behaving that irresponsibly. He can do what he wants with his money, and I guess your money too. But I would not call that a good trade. Fundamentals are great when the trades work out for you. But they are tragic when they don't. Think of all the bears shorting tech stocks too early in 1998 and 1999. In the end you may be proven right, but over the short term, you could lose everything. Hence John Maynard Keynes's famous quote, "the market can remain irrational longer then you can remain solvent."
Anyway, we can agree to disagree here. This post was not meant as an attack on Bob or what you guys do there. It just goes against every principle I stand for and was therefore compelled to respond to it. Anyway, all is well.