Don and Mav, Part Deux! (Live Chat)

Quote from andread:

Ah, semi strong efficiency :)
But wait, you said you used to look at fundamentals. What made you change your mind? Or you were having non public information?
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I never ever traded on fundamentals. What I use to back in my daytrading days in NY was go through all the news items in the morning before the market opened and looked for all the companies that reported earnings or had earnings revisions. I picked the ones I liked and added them to my quoteboard. Those were the stocks I traded that day.

I had no opinion on the direction of the stock, we just traded anything that moved. Being tapereaders, we were interested in those stocks because we knew they would have institutional involvement which made reading the tape much easier.

If BBY announced blowout earnings and revised their earnings higher for the next 2 quarters and the stock opened on a minus tick, I would short the shit out of that thing off the opening print. I was not an analyst. I was just looking for volatility.
 
Quote from exQQQQseme:

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
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Bob, I was not implying that what you do is not profitable. I was simply saying there is no edge in doing that. Many traders make a great living trading with no edge. And just because you have an edge does not mean you will ever make a dime. If it's working, keep doing it. I was just saying there is no edge in trading off of something that everyone has access unless there is a lot of ambiguity involved, which usually there isn't with stock fundamentals. Pretty straightforward.
 
Mav, thank you. Sorry if I misinterpreted your use of the word "edge". Somehow I came away with the impression that you were using this word in a competitive sense. No doubt that you and I both learned a long time ago that whether or not someone else is making or loosing money is totally irrelevant in terms of our own success or failure.

If I may, I would like to share one additional thing regarding public information. That is, although so much is available, not many people avail themselves of the financial information put out by the various corporations. Think back a few years to the AOL/TWX merger. In the months and years since, most people think that the failure of that merger lies with AOL. Without getting off on a tangent as to which of the two was the bigger drag, I remember looking at both companies and discovering that TWX was bringing to the table a mound of debt and very little cash. On the other hand, AOL had a nice pile of the green stuff and no long term debt.

For whatever reason, that one was an easy call.

Hope you are enjoying your weekend. I live in Miami. I know you live in Chicago and are no doubt a Bears fan. This place is really buzzing (and horn honking with the traffic) with Super Bowl anticipation.

Bob
 
Quote from Maverick74:

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.
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You have got to be kidding me, you take "extreme issue" with someone else's homerun? Who are you to take issue with any one elses trading, especially a successful trader? That was and still remains a great trade, one that only Bob and the Specialist got right! Just because it doesn't fit into "your" little model of what good trading is, doesn't mean it wasn't good trading.

Bob planned, traded, and executed his strategy perfectly on that play. He was never leveraged on that trade. He constantly traded in and out of that stock as it was continuing to drop. He had conviction and the ability to stick with it, and he was only risking a portion of his assets. The fact that the stock dropped 75% is irrelevant, the only thing that matters is that even if the stock did go bankrupt, he would only lose a reasonable amount of his capital. That trade will not work well for most traders, it did, and still does, work perfectly for Bob. And that's what we are talking about here, what is a good strategy for Bob, not anyone else.

There in lies the key to successful trading, finding the strategy that is perfect for your account size, mindset, and present circumstances. What works or is right for you, is not necessarily right for anyone else.
 
I was going to respond in a similar way as Mr. Schey did, but he did a good job IMO. Bob and I make thousands of trades every year, and yes, some may be interpreted as "deep pocket gambles" - and yes, we may have gotten "lucky" on a few...but think about the adage that says "those who work harder seem to get luckier" - my brother has, and does, work very hard ...not only in his own trading, but with his various groups (from our newbie students, to some of our "grizzled veterans")...

Bob will be the first to tell you about his "trades gone bad" - the hundreds of trades that you have to know "when to say when" and bail out (he hates to, but does, LOL).

This is not a game of "right or wrong" (as you, Mav, have said many times)...this is a game of being "right" more often than being "wrong" - simple percentages...not mutually exclusive by any means.

Mr. Mav, you are more similar to us than you might like to admit. You make money trading, you help others in their trading, you make some $$ from your Vtrader business as well...and I have enjoyed cultivating our relationship, and thank you for your participation.

And here I am, wide awake at 4:30 in the morning on Sunday...stupid biological clock...I've been waking up a this gawdawful hour for 30 years now, LOL.

All the best to Mav and Mike!!

(edit) - and who the Hell was stupid enough to short all the tech stocks in 1999?? Certainly not us...we had our traders get permission to trade internet stocks back in those days...and they're still thanking us, LOL.

Recognizing trends, etc., is another thing that has to be dealt with. Fundamentals are "part" of a much bigger picture. Currently, fundamentals are vital to our success, and when that changes, so will we.

Now it's time to go walk the dogs..back at ya later.

Don
 
Quote from mschey:

You have got to be kidding me, you take "extreme issue" with someone else's homerun? Who are you to take issue with any one elses trading, especially a successful trader? That was and still remains a great trade, one that only Bob and the Specialist got right! Just because it doesn't fit into "your" little model of what good trading is, doesn't mean it wasn't good trading.

Bob planned, traded, and executed his strategy perfectly on that play. He was never leveraged on that trade. He constantly traded in and out of that stock as it was continuing to drop. He had conviction and the ability to stick with it, and he was only risking a portion of his assets. The fact that the stock dropped 75% is irrelevant, the only thing that matters is that even if the stock did go bankrupt, he would only lose a reasonable amount of his capital. That trade will not work well for most traders, it did, and still does, work perfectly for Bob. And that's what we are talking about here, what is a good strategy for Bob, not anyone else.

There in lies the key to successful trading, finding the strategy that is perfect for your account size, mindset, and present circumstances. What works or is right for you, is not necessarily right for anyone else.
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No, I don't think you are understanding me. My issue here is not with Bob, but with the trade. Look, Trader Monthly does an expose on this guy and what a great trader he is. Bob has been trading for 30 years. In all those 30 years of successful trading, are you telling me bob couldn't have picked a better trade to showcase his talents then one where it went against him 75%??????

Come on, that is ridiculous. I'm sure Bob has made many great trades in his life. I would argue 95% of the trading community that reads that article will think Bob is nothing but a gambler, which I'm sure is not true. However, that is the impression everyone had that I showed the article to. That is not the kind of publicity Bright Trading wants or needs. All I'm saying is that trade is not how people should be trading and it sure should not be used as a proxy for how a successful trader trades.

And btw, mschey, I can take extreme issue with anyone I want per my first amendment rights. This is a message board last time I checked. That's what people do, they respond. So cool it a little bit on the rhetoric. Thanks.
 
Quote from Don Bright:

I was going to respond in a similar way as Mr. Schey did, but he did a good job IMO. Bob and I make thousands of trades every year, and yes, some may be interpreted as "deep pocket gambles" - and yes, we may have gotten "lucky" on a few...but think about the adage that says "those who work harder seem to get luckier" - my brother has, and does, work very hard ...not only in his own trading, but with his various groups (from our newbie students, to some of our "grizzled veterans")...

Bob will be the first to tell you about his "trades gone bad" - the hundreds of trades that you have to know "when to say when" and bail out (he hates to, but does, LOL).

This is not a game of "right or wrong" (as you, Mav, have said many times)...this is a game of being "right" more often than being "wrong" - simple percentages...not mutually exclusive by any means.

Mr. Mav, you are more similar to us than you might like to admit. You make money trading, you help others in their trading, you make some $$ from your Vtrader business as well...and I have enjoyed cultivating our relationship, and thank you for your participation.

And here I am, wide awake at 4:30 in the morning on Sunday...stupid biological clock...I've been waking up a this gawdawful hour for 30 years now, LOL.

All the best to Mav and Mike!!

(edit) - and who the Hell was stupid enough to short all the tech stocks in 1999?? Certainly not us...we had our traders get permission to trade internet stocks back in those days...and they're still thanking us, LOL.

Recognizing trends, etc., is another thing that has to be dealt with. Fundamentals are "part" of a much bigger picture. Currently, fundamentals are vital to our success, and when that changes, so will we.

Now it's time to go walk the dogs..back at ya later.

Don
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Don,

I know you know my post was not an attack on the way Bob trades but just that particular trade. And Don, I'm not letting you off the hook that easy. I stand by my post. That was not a good trade. I don't care if he put 100,000 hours of research into it, there is no way around it.

Let me ask you this Don and honesty is always appreciated. Let's say he bought that stock from $8 all the way down to $2. And on the way down, the fundamentals were all in tac. Everything looked great. No reason not to buy right. But let's say by the time it got down to $2, suddenly some information was revealed that showed that this thing was a dog and the fundamentals have drastically changed and there was no reason to hold it. Are you telling me Bob would sold the stock down there at 2.00?

I don't believe he would have. And even if he would, that is the risk of trading that way. See, you can buy a stock with faith in the good fundamentals, but you are making the assumption that the fundamentals are going to stay strong in the future. Now, that is normally not a big deal as most people would bail on a stock after a 5% or 10% loss and maybe re-enter the stock later. But if you are going to take 50% to 75% hits on a stock, this is definitely a concern.

See I would argue that a good trader could have looked at that stock and the fundamentals and said, OK, fundamentals look great, technicals look awful. Stock is making lower lows every day. I'm going to wait for this stock to bottom and show some signs of strength, then I'll start buying it if the fundamentals are still good. They would not just jump in and try to catch a falling knife. There is never a good reason Don to let a position go that much against you, no matter how much money you have.

Anyway, like I stated above, I don't think that article did any good for Bob as it probably portrays him as being the type of trader that he is not.
 
Quote from exQQQQseme:

Why can't the Bickersons at least take the weekend off?
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Just traders talking shop/debating trading issues in a venue open to other like-minded traders to learn and constructively, even instructively join in - Baron's very reason for establishing EliteTrader some eight years ago (already).
 
Quote from Maverick74:

Don,

Let me ask you this Don and honesty is always appreciated. Let's say he bought that stock from $8 all the way down to $2. And on the way down, the fundamentals were all in tac. Everything looked great. No reason not to buy right. But let's say by the time it got down to $2, suddenly some information was revealed that showed that this thing was a dog and the fundamentals have drastically changed and there was no reason to hold it. Are you telling me Bob would sold the stock down there at 2.00?

I don't believe he would have. And even if he would, that is the risk of trading that way. See, you can buy a stock with faith in the good fundamentals, but you are making the assumption that the fundamentals are going to stay strong in the future. Now, that is normally not a big deal as most people would bail on a stock after a 5% or 10% loss and maybe re-enter the stock later. But if you are going to take 50% to 75% hits on a stock, this is definitely a concern.
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We have ridden stocks down to zero, heck at some point you may as well... why sell at a lousy $2bucks...ask me some time about our Stratosphere shares....LOL. My point is simply that if you buy something based on good fundamentals (vs. virtually any other reason) that most of the time you made a good buy...maybe not that month or year, but more often than not. Some won't work because fundamentals change of course -so maybe, in certain cases you start replacing that stock with another.

Back on the floor, when we would get super short one option class, we wouldnt' buy those options back at overly high (theoretically) prices, we would hedge by buying the best (or at least better) priced options...thus basic hedging, spreading, etc.

That's another reason that our pairs work so incredibly well. Since we have a choice of which stock is "better" - we are generally long that stock based on fundamentals...and short the less strong stock...trading in and out, but all the time feeling good that we have the "correct" stock. Does this always work, of course not...(let me know when you find that strategy, LOL)...but it works way more often than not.

Would you rather pay $10,000 for a car with a $20,000 blue book value or a $2,000 book value (Price/book of one half or 5:1)...no need to answer, just pointing out how we view these things. Stocks are real companies, not just candles on a chart, and we still believe value is important.

I will send you a book that you may really enjoy...PM me your best mailing address.

And, the "trade" (good or bad) made for some fun reading, and caused a lot of interest...sort of like we did on our radio show for 7 years, try to bring up some controversy....same ol', same ol' makes a boring subject even more boring. If I recall I think this "trade" was in the "best trade, worst trade" section...and we copped to bad trades as well.

Again, all the best...good discussion...we'll have to do a "Point-Counter Point" when you and I broadcast again - maybe that will keep Bill Rennick awake, ROFL.

Don (AKA - Mr. Bickerson - working on the weekend)

:cool:
 
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