What is an edge? Derick Jeter has it what is it? It's very hard to explain. Some rare folks can look at the market and actually feel some undercurrents of civility and form- they can make a plan of action and see it through, they approach each day and each week with an open tablet la rosa (mind) and whatever imprint is made by research we, (oops) they go in that direction. Investing is surfing in a tsunami.
Once on the scent of an idea or angle then traditional weapons are used, TA, common sense, insider buying, major holders, a reason for movement,,, then every idea is hopefully tracked and watched... price points are established... entry areas and even exit areas are contemplated and the trade is made.
As to the question how many of the day traders who pop and drop the days hot idea, how many of them make money? Well it's an distressing answer- to some degree I think they all do-- it's unbelievably easy if all you care about is five cent moves. At the end of the day, the end of the qtr and the end of the year, a proper investor with themes and understanding of the market as a whole will do a lot better.
My best guess is over the years I have achieved approximately a 73% hit ratio. 73% of my trades achieve 20% or better returns every year despite usual market conditions. What of that other 27%? Well those break evens & losses have to be monitored carefully-- when I let them achieve root status and they dig deep into a portfolio and stay around my overall return goes down.
I explained the Hot Hand fallacy because it has great importance in investing.
You always ride the hot hand. Imagine you are on a basketball court watching me and there is no set number of shots I can take. you watch me clang a few off the rim as I warm up and limp around and then slowly as the old football muscles open up and the sense of numbness in my finger tips leaves for a while, the ball begins to rotate, the touch comes back and suddenly swish swish swish... it is during this slice of the event that you want to bet heavy on me. When the first shot comes off the fingertips and feels wrong... it's important to STOP>
By controlling the number of shots (trades) and by shooting more (trading more) when you have the hot hand you will assemble a year's worth of hot runs and hopefully be sitting on the sidelines when you are cool.
In investing it plays to have Warm hands.
Are your hands warm Jack?
Now personally I think it's rude to ignore people and put people on dumb down levels or what not; I can ignore my wife sometimes when she is in the room but only when she is asking me to do something I don't want to do... which brings us back to Jack. Yes he makes no sense! And in a bullying sort of grumpy old way.
I have a friend who works with the FBI on character mock ups -- profiling-- of terrorists and such I gave him your post so I could get a better feel of you. Even he was slightly stumped.
His name isn't Jack Hershey he told me. He is hiding his name; the first name is something else with a J most likely. Probably John. He lives a life of a solitary reader and writer, his expertise is something to do with human waste. Or Poop. There is a very strong sense of shit in his writings to you... BS a lot of that but actual human feces too. He is the kind of guy who might start a calamity and then profess to be a trained first responder. You would NOT want this guy in your local fire dept. Or monitoring water supplies!- Hope this helps.
Now that's not much of a profile granted but that's what Ive got. As to John/Jacks's advice to dear Zhang. It was wrong headed and mean. Zhang is a good man and he has gone through great wrongs to get to where he is now. All he asks is some silly question about maintaining an edge-- he was hoping you would say green tea and the TV down low, so that he could respond with his better ways. Please see the enclosed video to get some idea of the beauty and art in this form of investing.
http://www.youtube.com/watch?v=CXnD956hF6w
Jack you asked me if I meditated, no strike that you told me that I did not, a typical first responder mistake... What you should know is you are never too old to wash your soul, to clean your kidneys or learn an energy punch. I have done all of this I have completed all the WU SHU moves of the deer. Today in fact I see Master Lee for an energy transfer. Master Lee used to be a fighter and now he wears white. He is a healer now and he transfers his healing energy to you the patient> I hope the tingling in my feet ebbs away and the lack of sensation in my fingertips melts faster than the snow on a hot day. May my organs respond to the claps and may I leave on that table paper all my vile poisons. May the earth rotate and the oil well be closed. May little children all over the world enjoy peace. May markets go up and may birds sing... may I be in that frame of mind after Master Lee places me into a deep meditation and rubs my third eye.
Oh how lucky am I this man is still alive. RESPECT JACK you have to know how to give it when the time is right. I could teach you much about life and investing if you would like. I would gladly show you the way. All you have to do is ask. Open the door Jack, do not be afraid. You needn't attack a snake when you can walk away. Can you stack three tomatoes slap them with your palm and only break the middle one? I can't either but it's that kind of intensity and focus we all should be striving for.
" Acts " are meant top be gotten together. Lets start this new fine day with some simple exercises by my man Zhang. And next time you want to be mean to a man from China, think twice Jack. And then think again, the mind is a terrible thing to waste. ~stoney
~stoney
