Eye on Interest Rates

ok, so a combo of sentiment, fundamental and technical... sort of in that order. Right?

Personally, I think it is hazardous to your trading acct's health to trade off sentiment (ie watching other people). Look at the energy sector. Bullish sentiment has been off the charts (according to ndr.com) and yet it goes up more and more. The inflection point will come, but sentiment is only part of the picture.

I also can't help but think that while your capital was commited to the BEBE short and rode the price chart up and down, it may have been better employed elsewhere for that time. Nevermind that it was fortuitous that it did indeed ride it down and give you a BE rather than a loss.

But after all, we have different strategies and ways of looking at the market. If yours is serving you well, I'm not going to say it has no merit.

cheers and good trading
 
qdog,

Good luck to you but you are a danger to yourself IMO. You scare the sh!t out of me!

I am not going to criticise or argue the merits of formal fundamental or technical analysis, but I will say to you that money management is the key thing that will prevent you from losing your house and car.

Having some kind of limits on losses and management of positions is the only thing that would stop someone like yourself from making a million...... then losing ten million. Not intending to offend, I just think you'd sleep a lot easier with a bit more control.
 
Quote from let it run:

qdog,

Good luck to you but you are a danger to yourself IMO. You scare the sh!t out of me!

I am not going to criticise or argue the merits of formal fundamental or technical analysis, but I will say to you that money management is the key thing that will prevent you from losing your house and car.
Having some kind of limits on losses and management of positions is the only thing that would stop someone like yourself from making a million...... then losing ten million. Not intending to offend, I just think you'd sleep a lot easier with a bit more control.
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Let it run:

I have lot of confidence.
Its all a matter of how you look at it. Placing stops, for example, may or may not contribute to good money management. I know traders who got stopped out of ten positions in a row and ended up with losses that exceeded mine during the same period of time. Taking a lot of small losses may be better or worse than taking one big one.

The key is to be comfortable having money at riisk. What often masquerades as money management is a need for resolution.


James
 
Quote from Babak:

ok, so a combo of sentiment, fundamental and technical... sort of in that order. Right?

Personally, I think it is hazardous to your trading acct's health to trade off sentiment (ie watching other people). Look at the energy sector. Bullish sentiment has been off the charts (according to ndr.com) and yet it goes up more and more. The inflection point will come, but sentiment is only part of the picture.

I also can't help but think that while your capital was commited to the BEBE short and rode the price chart up and down, it may have been better employed elsewhere for that time. Nevermind that it was fortuitous that it did indeed ride it down and give you a BE rather than a loss.

But after all, we have different strategies and ways of looking at the market. If yours is serving you well, I'm not going to say it has no merit.

cheers and good trading
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Babak:

You are right that the capital I had in BEBE may have been more porductive somewhere else. I thought about that every day. Then again, If I would have switched it, I might have ended up being even worse off. I seldom get 100% committed. You have to remember that I work with whole portfolio of positions. The most the porfolio as a whole was down during that period was around 10%.

James
 
qdog,

I understand your theory and it looks as though you are objective about your commitment to your positions, but I still find it hard to understand where you draw the line in terms of getting it wrong.

I'm not here to question your abilities or stock selection methods, I just wondered at what stage do you actually take a loss on the chin before it gets to the point where you blow an uneccesary hole in your account. I can't work out how you have an objective way of shifting your opinion on something without having to endure the worst possible loss.

Still, if it is making you money, then who gives a toss what anyone else says- I just know that I would personally think that I must be missing the point of something a long way before its lost 30%+ of its value. You may have a great method of assessing long term value but if you have to waste a significant amount of time losing money on it rather than have it invested somewehre else or playing another stock, it makes no sense to me.

Just give me a toot when you drive past in your Ferrari and I'll shut up!
 
Quote from let it run:

qdog,

I understand your theory and it looks as though you are objective about your commitment to your positions, but I still find it hard to understand where you draw the line in terms of getting it wrong.

I'm not here to question your abilities or stock selection methods, I just wondered at what stage do you actually take a loss on the chin before it gets to the point where you blow an uneccesary hole in your account. I can't work out how you have an objective way of shifting your opinion on something without having to endure the worst possible loss.

Still, if it is making you money, then who gives a toss what anyone else says- I just know that I would personally think that I must be missing the point of something a long way before its lost 30%+ of its value. You may have a great method of assessing long term value but if you have to waste a significant amount of time losing money on it rather than have it invested somewehre else or playing another stock, it makes no sense to me.

Just give me a toot when you drive past in your Ferrari and I'll shut up!
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let it run

I don't have an objective way of shifting my opinion. It is all subjective. I close positions when I am convinced that they are not going to work out. I don't do anything that is arbitrary.
Most of my decision to hold these losing positions comes from my overall negative read on the market. If I had been convinced at any time that it was time to cover shorts in general, these positions would already be gone. One reason my techniques make so little sense to others is that there are so few position traders left in the world.
I don't want you to think that I have an ironclad policy of riding losses. These kinds of positions are actually very rare in my way of doing things. In a different market environment I would have already covered GOOG, BEBE and a lot of others.

One thing is for sure. I'm don't want other people to trade the way I do. If they did, then it would stop working for me.

James
 
I think I understand better now, you devote a small portion (10%?) to any position, so the GOOG short doesn't really hurt you that much per se. But I think its the principle of it that rubs me - and perhaps others also - the wrong way. As traders its drilled into us to have discipline and to not let a trade run against us beyond a preset threshold. As well as the opportunity cost that I mentioned before.

I'm not a fundamental type of guy but IMHO shorting GOOG for a long term trade is wrong because they are one hell of a force to be reckoned with. They have the deepest warchest and are hoovering all the brightest people around. Their pipeline is full and deep with new businesses and ways of scaling their core competency higher and higher. You probably know that they will be rolling out killer apps like IM, VoIP and WiFi, video/audio search, TV, etc. You haven't seen anything yet. These guys will rule the next decade in the internet sector.

To me it smacks of shorting MMM or any of the other stalwarts after their IPO.
 
qdog, I understand you don't have price stop loss for your portfolio. I don't use stops in my longterm stock portfolio either (I don't daytrade stocks). But you may want to play with *time* stops. ie. if the price has'nt moved in your direction by X days/months you stop out. Then re-analyze the trade after another X period and re-enter if your thesis is still valid. You could try backtesting a time stop on your trade history data and see what you come up with.

As for interest rates, I think the feds will increase rates. Greenspan has already indicated that he is looking for a soft landing for the real estate bubble. Also bonds have inched higher So is the movement in bond speculation on interest rates or flight to quality signalling a recession. gold has'nt broken up so I'm thinking mostly speculation. Anyonce care to comment on that?
 
Quote from mhashe:

qdog, I understand you don't have price stop loss for your portfolio. I don't use stops in my longterm stock portfolio either (I don't daytrade stocks). But you may want to play with *time* stops. ie. if the price has'nt moved in your direction by X days/months you stop out. Then re-analyze the trade after another X period and re-enter if your thesis is still valid. You could try backtesting a time stop on your trade history data and see what you come up with.

As for interest rates, I think the feds will increase rates. Greenspan has already indicated that he is looking for a soft landing for the real estate bubble. Also bonds have inched higher So is the movement in bond speculation on interest rates or flight to quality signalling a recession. gold has'nt broken up so I'm thinking mostly speculation. Anyonce care to comment on that?
More...

mhashe

I think a time stop is a better idea than a price stop loss. I have some respect for backesting. But, just deciding to close a position without a particular rule to follow has always given me good results.
Everyone who thinks they come out a head using stops should also do backtests also. The results are always surprising.
My advice to everyone is to become comfortable having money at risk. Traders today are like the baseball play who is technically good but has one flaw. He is afraid to face the fastball.
It is almost impossible to make a high profit if a disproportionate amount of thought goes into avoiding losses. I keep the odds in my favor and have a lot of confidence.

James
 
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