Quote from jack hershey:
-------------------------------------------------
Quote from agrau:
I would believe that the movement of components ultimately move the sector. You suggest that first the sector moves (relative to other sectors), and then the components. Or is there something I misunderstood?
This is a rich and deep topic. One of the things that I have done most of my life is model opportunities in various markets, business sectors, governments and nations. Conversely, I have worked on institutionalizing the solutions to societal and community problems.
If there ever were a place where traditional analysis (FA) meets Technical Analysis, sector analysis would be that place. The quants are not really viable in all of this it turns out; they are driven by trying to perfect the application of their knowledge rather than "making money" which is the underlying force of the financial industry.
Fundamental analysis prevails as the basis for sector analysis. As we all know it largely leaves out the price aspect of securities. Long ago, the NYSE, promulgated "Seven Keys to Value", all FA indicators and measures. I added 10 others to round out 17 facets of traditional analysis. Using these produced a persistent measure of future price appreciation.
That approach in those days tended to obliterate the fundamental utilization of asset allocation, so popular until a few years ago. Asset allocation is based upon client pain as the basis of reallocation (especially "when" it happens).
Now, we have set to scene for what goes on in the equities market. Sector movement as a basis for adjusting application of capital could have been just as powerful as asset allocation (instead of the presumably independent asset classification divisions that persumably go in and out of favor.)
Sectors move relative to each other, initially, on the basis of FA stuff. Analysts work this turf horribly and "popularize" what is hot and what is not. The "herd" moves in response to this analysis theme. FA drives inital sector moves.
Later, enter price movement based on constant supply (This shoots in the a$$ all supply/demand BS) and VARIABLE demand. Demand is created as a consequence of FA analysts efforts and their "white" papers being delivered to big money firms from their institutional investment advisory firms. One of my past "consulting" activities was designing scope and bounds of "white papers, do executive interviews in situ, critiquing production team results, and providing expert support for presentations of such firms. As white papers compete for selection and use by big money, then as buys are made for large portfolios, and then "demand" for "constant supply" going up, the given sector begins to move. Gradually the retail market becomes informed as brokers and financial advisors "hear" the street and pass stuff on to clients.
Traders who do rate of change and acceleration of sectors see all of this before price moves. FA values move first, volume increases as it follows FA value increasing. Price, then, moves according to the P, V relation.
Traders focus on money velocity, so they fit into the sequence during the fastest increases in money velocity ("just in time"so to speak). Increasing money velocity is "acceleration". This is where "xover" trading comes from.
I was intercepted by the institutional investing grapevine by serendipity. Kemeny (inventor of BASIC and head of Dartmouth College, subsequently) advocated that executives of large corps get realigned mathematically vis a vis decision making. I was enrolled to do this for Greenwich residents whose corp headquarters were in nearby NYC. Naturally, making money with earned wealth became part of this. Most of them had not experienced the money velocities possible nor that market timing was the key to making money. We all enjoyed the experience and after a while I left to live in Switzerland (See Darvas travels at that time as a parallel example).
In your other explanation on your method you mention volume, rate-of-change and velocity changes as values to keep an eye on. Do you have any experience/opinion on using relative strength between either components or component vs. sector index? The reason I am asking is that point&figure based sector rotation, as taught by Chartcraft or Dorsey, Wright, apply relative strength to find leaders and laggards. Any thoughts on this?
All of these things are well connected. Some Wizards are inventors of tools that deal with detecting stuff in this arena. This is another example of the transition from FA to TA in the continuing process of detecting opportunity. Welles Wilder is one of my favs. It is rare that volume and price are combined in any indicators. Those that do, have the advantages of using volume as a leading indicator of price.
Using WJO an an example (for IT type investing), you see EPS is the major FA indicator. It's partner RS, is the price assessment tool. The combination is strident for scanning to have universes that are risk free.
Money and risk management do take a back seat at some point when the money velocitiy has been largely optimized. By operating with supreme universes, you are far far away from the hauinting voices of risk and money management hawkers who largely deal with CYA repairs caused by huge voids in knowledge, and skills largely precipitated by incomplete and irrational approaches.
Those you mention are refiners of foundational precepts. Relative Strength absolutely eliminates those potential investments that cannot compete in the dynamic of making money. Obviously increasing RS is where the real payoffs occur.
What you are focussed upon is commendable and very rational. I support threads here in ET where the participants are really accessing knowledge on their own.
The goal you will attain as time passes is to have a continuing selection of money making stocks (3 beta or better). You will be using leading indicators of price that allow you to continually optimize your performance. At some point you will be making capital instantly available (by exiting a high money velocity stock) to enter each opportunity that represents an improved short term use of the capital you extract.
What is so heartening about all of this, is that it is not difficult. What is particularly refreshing as well is that there really is no competition or rivalry at this level of play. There is only one limit that I have found so far. For any stream of capital, it really is not possible to do more than 10% of the trading in that equity on a given day. It is absolutely true that your best days will be a direct and precise result of being in the right sector at the right time. Over time, I have found that it is a good idea for an accomplished trader to have a few sectors that are known down cold. If you get to the quantity limit in an equity of a sector you know down cold, you will have the experience of pulling money out of the market at a daily rate equivalent to 1/10th to 1/20th of the total income of some of the heavy hitters now posting in a current wizard oriented thread.
Thanks,
agrau
Who is Jack Hershey and what's his method?
- Thread starter vingbel
- Start date
Grob109
Registered: Aug 2003
Posts: 2754
04-23-04 08:38 PM
________________________________________
Quote from ig0r:
So volume of all sector stocks combined and look for strong increase along with high rate of change as a whole?
________________________________________
Yes. The way to make money trading in this "kick off" is to be ready.
You can do a weekly analysis of the sectors. Intermediate term movement is the focal fractal. If you look at school of trout in a pool of water you see how it works.
The fish school. Among them there are fish who turn out to give the school a sense of action. In a small gathering within the school, some fish beging to move as a group. you see the velocity (I measure it using spread sheet that has motion indicators (FA) as criteria.) The fish are not changing size (think value (price)). They accelerate out of the school and parts of it follow. Thus the market is moving being lead by a group I call a sector.
That is the NLP of it.
To make money you set up a quote sheet to list each stock in the sector. Order it by "unusual volume" if you use qcharts. This puts "leaders" at the top.
As you watch intraday you see the cummulative volume forthe day and you compare it to 65 day average using "unusual volume".
When the volume easily passes the lowest daily volume values (DU for Dry Up), then you get to see price go green and the % net for the day goes up by 5% of more within an hour of passing through the DU volume.
As the top of the list "peels out" the others begin to follow. there is a saying "Watch the leaders and trader the laggers". It is a simple anticipatory low risk strategy.
You will see that the peel out takes up to three days. Not all will go the first day. You asked about that already because of your "market sense".
The sector move will go on for an intermediate term period. but if you are really pushing "making money" and having a steep equity curve, you will be a "trader" instead. You trade the "peel out" on the highest volatility "lagger" stocks in the sector.
For those that know I "crossover' trade based on money velocity, you can see here that this is a vital aspect of getting to making money on a "ridiculous" unbelievable money velocity level.
if you keep sector "portfolios" on stocktables.com, you will notice that they get lots of attention form the programs behindstocktables.com.
You will be exiting with profits as the talkinh heads and lists begin to note the sector. The herd will be arriving. So then you witness "waves of advances on the dialy charts. About 5 waves per 6 months.
Look at HOV from NOV 2002 onward. The channel is up. You own for the right to left traverse. Since the retrace (Trend Fader tries to trade these)falls off instead of going up, you sideline and wait for the right side of the channel to be hit and the price to take off again and again and again.
Splicing about four or five sectors into your money streams gives you a daily selection of BO stocks.
Doubling capital takes about 2 1/2 quarters. HOV does better as you see. MR Market missed that one after I suggested it to him. lol.
Registered: Aug 2003
Posts: 2754
04-23-04 08:38 PM
________________________________________
Quote from ig0r:
So volume of all sector stocks combined and look for strong increase along with high rate of change as a whole?
________________________________________
Yes. The way to make money trading in this "kick off" is to be ready.
You can do a weekly analysis of the sectors. Intermediate term movement is the focal fractal. If you look at school of trout in a pool of water you see how it works.
The fish school. Among them there are fish who turn out to give the school a sense of action. In a small gathering within the school, some fish beging to move as a group. you see the velocity (I measure it using spread sheet that has motion indicators (FA) as criteria.) The fish are not changing size (think value (price)). They accelerate out of the school and parts of it follow. Thus the market is moving being lead by a group I call a sector.
That is the NLP of it.
To make money you set up a quote sheet to list each stock in the sector. Order it by "unusual volume" if you use qcharts. This puts "leaders" at the top.
As you watch intraday you see the cummulative volume forthe day and you compare it to 65 day average using "unusual volume".
When the volume easily passes the lowest daily volume values (DU for Dry Up), then you get to see price go green and the % net for the day goes up by 5% of more within an hour of passing through the DU volume.
As the top of the list "peels out" the others begin to follow. there is a saying "Watch the leaders and trader the laggers". It is a simple anticipatory low risk strategy.
You will see that the peel out takes up to three days. Not all will go the first day. You asked about that already because of your "market sense".
The sector move will go on for an intermediate term period. but if you are really pushing "making money" and having a steep equity curve, you will be a "trader" instead. You trade the "peel out" on the highest volatility "lagger" stocks in the sector.
For those that know I "crossover' trade based on money velocity, you can see here that this is a vital aspect of getting to making money on a "ridiculous" unbelievable money velocity level.
if you keep sector "portfolios" on stocktables.com, you will notice that they get lots of attention form the programs behindstocktables.com.
You will be exiting with profits as the talkinh heads and lists begin to note the sector. The herd will be arriving. So then you witness "waves of advances on the dialy charts. About 5 waves per 6 months.
Look at HOV from NOV 2002 onward. The channel is up. You own for the right to left traverse. Since the retrace (Trend Fader tries to trade these)falls off instead of going up, you sideline and wait for the right side of the channel to be hit and the price to take off again and again and again.
Splicing about four or five sectors into your money streams gives you a daily selection of BO stocks.
Doubling capital takes about 2 1/2 quarters. HOV does better as you see. MR Market missed that one after I suggested it to him. lol.
Grob109
Registered: Aug 2003
Posts: 2754
04-23-04 08:08 PM
________________________________________
Quote from ElectricSavant:
And you heard it live on Et...
What will you folks do with this info?...take a gander at it.
Michael B.
________________________________________
4 out of 5 people do not agree nor give any regard to my views. You can count on this for anything I post.
Hardly anyone will begin to consider how to use my posts along side theirs. The broadest reasons relate to the differences in what I practice and what others do. There is no connection nor any overlap.
Sector evaluation is not a trading issue per se as we see here.
Sector movement is an intermediate term consideration.
Once in a while a person brings up a real winner in ET. emk662 (I use an off the floor high quality chair myself) did this in the context of trading. igOr nails the crucial trading consideration.
At some point in the sequence the sector movement triggers price movement and it is a sustained move....
All of this precedes the talking heads and the "hot news". It precedes making the lists and the shifts in EPS and RS. for traders it is extremely important to be there ahead of the herd.
Imagine the effort it takes to be clued in on this kind of stuff.
Trend Fader said it all. It is "ridiculous". What he means is that it is totally impossible for him and 4 out of 5 people to grasp what MAKING MONEY really is.
I USE sector analysis to "be prepared". And there is that moment when a sector "takes off". If you added to your stock a day journal, a background of sector analysis and caught sector moves using intraday volume moves that precipitate early am price moves, you would have many significant results: you would make your profits in a week (and more if you had an exit strategy)and you would not have any retracements showing on your PnL. You would not be able to do dumb dollar averaging because it would not come up.
Sectors ripple out when they BO. Leaders and laggers, offset in direct proportion to their EPS and RS. You can see the current rippling by simply do the increasing volume ranking on stocktables.com (do a tight quality screen to limit the list to 100 to 200 stocks.)
All this is "ridiculous" for ET people it turns out. BUT it makes millionaires out of people who do the work. I, today, fail to understand why anyone who is a highschool grad or better, cannot equal or exceeed his salary within three years no matter how small the capital is that he starts with.
Here we also get to see the consequences of persons "blowing out" their minds as a consequence of repeated failure. Look at the Waggie/ Trend Fader non-dialogue to see one person pointing out the totally wiped out behavior of another.
Check my next post to igOr. I will point out how to watch a sector "peel out" on price following the volume breakout of an accelerating sector.
Registered: Aug 2003
Posts: 2754
04-23-04 08:08 PM
________________________________________
Quote from ElectricSavant:
And you heard it live on Et...
What will you folks do with this info?...take a gander at it.
Michael B.
________________________________________
4 out of 5 people do not agree nor give any regard to my views. You can count on this for anything I post.
Hardly anyone will begin to consider how to use my posts along side theirs. The broadest reasons relate to the differences in what I practice and what others do. There is no connection nor any overlap.
Sector evaluation is not a trading issue per se as we see here.
Sector movement is an intermediate term consideration.
Once in a while a person brings up a real winner in ET. emk662 (I use an off the floor high quality chair myself) did this in the context of trading. igOr nails the crucial trading consideration.
At some point in the sequence the sector movement triggers price movement and it is a sustained move....
All of this precedes the talking heads and the "hot news". It precedes making the lists and the shifts in EPS and RS. for traders it is extremely important to be there ahead of the herd.
Imagine the effort it takes to be clued in on this kind of stuff.
Trend Fader said it all. It is "ridiculous". What he means is that it is totally impossible for him and 4 out of 5 people to grasp what MAKING MONEY really is.
I USE sector analysis to "be prepared". And there is that moment when a sector "takes off". If you added to your stock a day journal, a background of sector analysis and caught sector moves using intraday volume moves that precipitate early am price moves, you would have many significant results: you would make your profits in a week (and more if you had an exit strategy)and you would not have any retracements showing on your PnL. You would not be able to do dumb dollar averaging because it would not come up.
Sectors ripple out when they BO. Leaders and laggers, offset in direct proportion to their EPS and RS. You can see the current rippling by simply do the increasing volume ranking on stocktables.com (do a tight quality screen to limit the list to 100 to 200 stocks.)
All this is "ridiculous" for ET people it turns out. BUT it makes millionaires out of people who do the work. I, today, fail to understand why anyone who is a highschool grad or better, cannot equal or exceeed his salary within three years no matter how small the capital is that he starts with.
Here we also get to see the consequences of persons "blowing out" their minds as a consequence of repeated failure. Look at the Waggie/ Trend Fader non-dialogue to see one person pointing out the totally wiped out behavior of another.
Check my next post to igOr. I will point out how to watch a sector "peel out" on price following the volume breakout of an accelerating sector.
Grob109
Registered: Aug 2003
Posts: 2754
04-23-04 06:05 PM
This is very important stuff.
An Excel sheet is an easy way to accomplish this stuff. Prior to the invention of spread sheets it took a little doing.
It operates in a modus about equal to IT trending of equities.
One of the very fortunate things is that there are always opportunities.
Fortunately, the relationships of the key variables to use for analysis are such that they all are leading of price moves of equities in any perticular sector.
Personally I use about 200 separate sectors and I monitor their first derivatives to see how fast they are coming on and how fast they are exiting. Usually in most data bases you can also sort the constituents of each of the sectors to also determine the best money making ones to use.
Just for humor and contrast, MR market tries for the last 15% of a move using his inane selection process. Most of his selections are often "spent" and actually are candidates that fall into sectors that have peaked and are commencing their retreat.
He chose a housing construction equity this way recently. A longtime before that I suggested HOV to him as an alternative to another of his mispicks as it was proceding to be part of that sector move. I saw it as it came off base of 10 or so going to the top.
What you are addressing is the beginning of 400% moves like HOV's.
Any sector moves relative to others before it's components begin they cyclical price moves in that sector.
I use three levels of duration to do analysis: short term, intermediate term, and longer term. the rate of change (first derivative) in each of the term durations, strikingly points out what is coming up.
Long ago (late 50's), sector analysis was not popular to any extent. Data was sparse as well. I felt it was important, though. My compromise then was to focus on sectors that were, in turn, driven by sectors closer to ultimate consumers. I figured that they were like a ice skater at the end of a whip. It turned out to be correct. You will see this phenomena at play today as some sectors accelerate (second derivative) past the sectors they supply. With the invention of bytes as an alternative investment to molecules, all of this is even more amplified. The advent of "bubbles" is another example of sector emphasis.
Getting this down is one of the most rewarding things going. If you look around you will see that very wizards got this down.
While I remained an amateur all my life. I was paid a portal to portal courtesy by a NYC based institutional investment advisory firm in the early 60's, to commute from Greenwich to attend luncheons mostly related to institutional white paper sector analysis. Asked but never did it, I was also asked to tour Europe quarterly, on this subject as a presenter for big money II.
Sector analysis would be a terrific replacement for what the financial industry thinks is "research" and market analysis today.
Once you get it all down, you will find it scares the $hit out of others who are really skilled in near term stuff.
Registered: Aug 2003
Posts: 2754
04-23-04 06:05 PM
This is very important stuff.
An Excel sheet is an easy way to accomplish this stuff. Prior to the invention of spread sheets it took a little doing.
It operates in a modus about equal to IT trending of equities.
One of the very fortunate things is that there are always opportunities.
Fortunately, the relationships of the key variables to use for analysis are such that they all are leading of price moves of equities in any perticular sector.
Personally I use about 200 separate sectors and I monitor their first derivatives to see how fast they are coming on and how fast they are exiting. Usually in most data bases you can also sort the constituents of each of the sectors to also determine the best money making ones to use.
Just for humor and contrast, MR market tries for the last 15% of a move using his inane selection process. Most of his selections are often "spent" and actually are candidates that fall into sectors that have peaked and are commencing their retreat.
He chose a housing construction equity this way recently. A longtime before that I suggested HOV to him as an alternative to another of his mispicks as it was proceding to be part of that sector move. I saw it as it came off base of 10 or so going to the top.
What you are addressing is the beginning of 400% moves like HOV's.
Any sector moves relative to others before it's components begin they cyclical price moves in that sector.
I use three levels of duration to do analysis: short term, intermediate term, and longer term. the rate of change (first derivative) in each of the term durations, strikingly points out what is coming up.
Long ago (late 50's), sector analysis was not popular to any extent. Data was sparse as well. I felt it was important, though. My compromise then was to focus on sectors that were, in turn, driven by sectors closer to ultimate consumers. I figured that they were like a ice skater at the end of a whip. It turned out to be correct. You will see this phenomena at play today as some sectors accelerate (second derivative) past the sectors they supply. With the invention of bytes as an alternative investment to molecules, all of this is even more amplified. The advent of "bubbles" is another example of sector emphasis.
Getting this down is one of the most rewarding things going. If you look around you will see that very wizards got this down.
While I remained an amateur all my life. I was paid a portal to portal courtesy by a NYC based institutional investment advisory firm in the early 60's, to commute from Greenwich to attend luncheons mostly related to institutional white paper sector analysis. Asked but never did it, I was also asked to tour Europe quarterly, on this subject as a presenter for big money II.
Sector analysis would be a terrific replacement for what the financial industry thinks is "research" and market analysis today.
Once you get it all down, you will find it scares the $hit out of others who are really skilled in near term stuff.
bubba7
Registered: Feb 2003
Posts: 787
08-05-03 01:46 AM
________________________________________
Quote from dvshucks:
Hey, I'm pretty new and am trying out a few strategies. Could someone tell me anything about trading Sector Leaders/Laggards. How do you know when to buy a laggard?
****After leader BO's, start a pro rata volume tab on the laggard. The laggard will come off the recent low volumes it maintain by a factor of 3 to 4 in the first two hours after the open. When that happens you have about an hour to enter the laggard before price begins to move. Use a 30 min fractal.
If the laggard falls off hard, should you instantly short the leader?
****Try to focus a little. The leader falls off before the laggard. I may be possible that you do not have a clear definition of leader and laggard. All sectors have them.
What kind of industry is this successful with?
*****All. by doing sector analysis you8 can get fairly far a head of the herd. IBD has the best setor classsification set and they renk quite well and they keep a great score card you can use on an excel spread sheet.
Any ideas are appreciated, thanks.
** Do some reading in How to Make Money in Stocks. Underline too. do not try to use this stuff until you are fairly profitable.
Registered: Feb 2003
Posts: 787
08-05-03 01:46 AM
________________________________________
Quote from dvshucks:
Hey, I'm pretty new and am trying out a few strategies. Could someone tell me anything about trading Sector Leaders/Laggards. How do you know when to buy a laggard?
****After leader BO's, start a pro rata volume tab on the laggard. The laggard will come off the recent low volumes it maintain by a factor of 3 to 4 in the first two hours after the open. When that happens you have about an hour to enter the laggard before price begins to move. Use a 30 min fractal.
If the laggard falls off hard, should you instantly short the leader?
****Try to focus a little. The leader falls off before the laggard. I may be possible that you do not have a clear definition of leader and laggard. All sectors have them.
What kind of industry is this successful with?
*****All. by doing sector analysis you8 can get fairly far a head of the herd. IBD has the best setor classsification set and they renk quite well and they keep a great score card you can use on an excel spread sheet.
Any ideas are appreciated, thanks.
** Do some reading in How to Make Money in Stocks. Underline too. do not try to use this stuff until you are fairly profitable.
Oh man, this is going to put T28 over the top! 
Grob109
Registered: Aug 2003
Posts: 2754
04-25-04 07:40 PM
I read the posts here. And it is clear that there is an excellent understanding that the power of considering market sectors is pervasive and provides a superb context for making money.
I want to respond to the adroit way in which, logically, people have determined that we are looking at a big picture and properly.
The global picture does really drive the sectors of the US trading markets. Invest the time in skimming business week to see the pictures taken in China. Regard the economic numbers along a few columns.
People all over the world are intelligent and leading their lives to forward their interests. We are now connected electronically and everyone is empowered to perform on a level playing field.
The US has stepped aside from the enduring process of iterative refinement (by the numbers and rational reasoning processes) to practice operating from an idealistic black and white viewpoint. As an aged person, I am experiencing living in the most "expensive" decision making period I have ever witnessed. We (the US) will pay the piper for this beyond my time horizon.
In contrast, there is certainly an alternative taking effect around the globe that has a silver lining. The world is actually very capable of taking care of itself and bettering this situation and doing it rapidly. Global inovation based upon the corporate model will prevail. And that is where market sectors play out.
At all times various market sectors will step into the limelight to factor the short term opportunities directly into accelerated capital appreciation.
The world has never seen before the rapidity with which wealth will be created. Contributors here recognize and describe this. I especially emphasize the sectors that supply other sectors that are close to the ultimate consumer.
There are parts of the world that will be acting as resources for other parts that are going to grow in quality of life beyond belief.
The US had the opportunity to lead the world's process of "incorporating". The energizing of the globe as a needs delivery system is going to be based on the corporate financial model and financial equities markets throughout the world will take the measure of the wealth building and built.
A swedish based furiture company allowed Bill Gates to be passed in wealth by creating a delivery system for furniture.
We as traders need to intercept this opportunity. It is my belief that "creaming the markets" is the way to exceed anything as yet seen it terms of making money and acquiring great wealth for individuals.
I devote one screen to a display of a map. It is a map of squares(rectilinear shapes) bunched by sectors that are bounded with frames. All squares are colored by a red to green spectrum that shows their daily losses (red), neutral (grey) or gains (green). This is rough and crude and interesting. Background stuff.
I run quote sheets where leading indicators of price are shown for stocks that exhibit high money velocities. Hot lists. Cross over trading with amounts of money that can not be used in leveraged places where the markets just can't handle the capital.
Even with hot lists, money has to be "flowed". Flowed at rates dictated by trading block size and cummulative daily volume. It is like an individual's printing machine for printing money.
The amount of capital available to take out of the market has no real limit and an individual can never affect the market to any extent presently. In the years ahead all of this will be changing by orders of magnitude.
In this thread it has been pointed out that all of this can be easily systematized for the persent and for the foreseeable future. It is correct to use a ZOOM in approach. I also tenure performers.
For sectors, focus on conventional sets.
To cut to the chase (KISS) for now, use several (three) sets of rankings for the sectors. Short term, middle term and longer term. We need to see the rankings change (This is velocity because you have a fixed periodicity of sampling) and to know their rate of change This is acceleration by the same reasoning). You get from this, the operation of the fundamental precept of snthesizing harmonics. (See aluminum and housing construction presently as already pointed out.)
Use the leader/ lagger risk minimization strategy.
Use the compound interest formula (See the set of Q's that I recommend everyone work through; this is Q 1). Get it very straight that doing more cycles is much more important than profit per cycle. Cut off the ends of cycles to do this.
Learn to enter late and leave early in a cycle. Only hold through maximum money velocities. Acceleration from zero is not important compared to the maximum trajectories that occur when price is going through the axis of the cycle. When a stock begins to decelerate the exit is predicated on a switch that occurs as another stock accelerated into the maximum money velocity band.
Get it straight that you cannot optimize making money from an intuitive point of view. You are not smart enough at this point to deal with exponential functions which is the nature of all natural phenomena. Markets are natural living entities.
The huge bottom line in markets is that the big players are screwed. Individuals are the ones that make money.
as time passes and you have a lot of capital, you will experience constraints for moving that capital. There is no difficulty in pulling capital out of an equity and applying it to another and nettiing low seven digits on that one effort in a single money stream of many in the overall accounts.
What is required is to always have a selection of opportunities.
The primary function you have to assume, in time, is making cash available for opportunities that you have. Obviously and uniquivicably, the opportunities lay in making continuous and excellent use of sector analysis and universe selection/maintenance (add/delete function).
I surround the scope and bounds of equities investing with being aware of what is going on in the world. I have nine pairs of mismatched processes (slow(column 1) compared to faster(column 2)). I look at the consequences (column 3) of these pairs not working. I also examine what might be done to solve the consequential problems (column 4). These 36 considerations often point out sector hot spots and opportunities.
One pair is legal processes (slow) vs inovation (fast); Money and size controls ("making markets"* consequence); use alternatives to legal processes (solution). *We will play here.
Registered: Aug 2003
Posts: 2754
04-25-04 07:40 PM
I read the posts here. And it is clear that there is an excellent understanding that the power of considering market sectors is pervasive and provides a superb context for making money.
I want to respond to the adroit way in which, logically, people have determined that we are looking at a big picture and properly.
The global picture does really drive the sectors of the US trading markets. Invest the time in skimming business week to see the pictures taken in China. Regard the economic numbers along a few columns.
People all over the world are intelligent and leading their lives to forward their interests. We are now connected electronically and everyone is empowered to perform on a level playing field.
The US has stepped aside from the enduring process of iterative refinement (by the numbers and rational reasoning processes) to practice operating from an idealistic black and white viewpoint. As an aged person, I am experiencing living in the most "expensive" decision making period I have ever witnessed. We (the US) will pay the piper for this beyond my time horizon.
In contrast, there is certainly an alternative taking effect around the globe that has a silver lining. The world is actually very capable of taking care of itself and bettering this situation and doing it rapidly. Global inovation based upon the corporate model will prevail. And that is where market sectors play out.
At all times various market sectors will step into the limelight to factor the short term opportunities directly into accelerated capital appreciation.
The world has never seen before the rapidity with which wealth will be created. Contributors here recognize and describe this. I especially emphasize the sectors that supply other sectors that are close to the ultimate consumer.
There are parts of the world that will be acting as resources for other parts that are going to grow in quality of life beyond belief.
The US had the opportunity to lead the world's process of "incorporating". The energizing of the globe as a needs delivery system is going to be based on the corporate financial model and financial equities markets throughout the world will take the measure of the wealth building and built.
A swedish based furiture company allowed Bill Gates to be passed in wealth by creating a delivery system for furniture.
We as traders need to intercept this opportunity. It is my belief that "creaming the markets" is the way to exceed anything as yet seen it terms of making money and acquiring great wealth for individuals.
I devote one screen to a display of a map. It is a map of squares(rectilinear shapes) bunched by sectors that are bounded with frames. All squares are colored by a red to green spectrum that shows their daily losses (red), neutral (grey) or gains (green). This is rough and crude and interesting. Background stuff.
I run quote sheets where leading indicators of price are shown for stocks that exhibit high money velocities. Hot lists. Cross over trading with amounts of money that can not be used in leveraged places where the markets just can't handle the capital.
Even with hot lists, money has to be "flowed". Flowed at rates dictated by trading block size and cummulative daily volume. It is like an individual's printing machine for printing money.
The amount of capital available to take out of the market has no real limit and an individual can never affect the market to any extent presently. In the years ahead all of this will be changing by orders of magnitude.
In this thread it has been pointed out that all of this can be easily systematized for the persent and for the foreseeable future. It is correct to use a ZOOM in approach. I also tenure performers.
For sectors, focus on conventional sets.
To cut to the chase (KISS) for now, use several (three) sets of rankings for the sectors. Short term, middle term and longer term. We need to see the rankings change (This is velocity because you have a fixed periodicity of sampling) and to know their rate of change This is acceleration by the same reasoning). You get from this, the operation of the fundamental precept of snthesizing harmonics. (See aluminum and housing construction presently as already pointed out.)
Use the leader/ lagger risk minimization strategy.
Use the compound interest formula (See the set of Q's that I recommend everyone work through; this is Q 1). Get it very straight that doing more cycles is much more important than profit per cycle. Cut off the ends of cycles to do this.
Learn to enter late and leave early in a cycle. Only hold through maximum money velocities. Acceleration from zero is not important compared to the maximum trajectories that occur when price is going through the axis of the cycle. When a stock begins to decelerate the exit is predicated on a switch that occurs as another stock accelerated into the maximum money velocity band.
Get it straight that you cannot optimize making money from an intuitive point of view. You are not smart enough at this point to deal with exponential functions which is the nature of all natural phenomena. Markets are natural living entities.
The huge bottom line in markets is that the big players are screwed. Individuals are the ones that make money.
as time passes and you have a lot of capital, you will experience constraints for moving that capital. There is no difficulty in pulling capital out of an equity and applying it to another and nettiing low seven digits on that one effort in a single money stream of many in the overall accounts.
What is required is to always have a selection of opportunities.
The primary function you have to assume, in time, is making cash available for opportunities that you have. Obviously and uniquivicably, the opportunities lay in making continuous and excellent use of sector analysis and universe selection/maintenance (add/delete function).
I surround the scope and bounds of equities investing with being aware of what is going on in the world. I have nine pairs of mismatched processes (slow(column 1) compared to faster(column 2)). I look at the consequences (column 3) of these pairs not working. I also examine what might be done to solve the consequential problems (column 4). These 36 considerations often point out sector hot spots and opportunities.
One pair is legal processes (slow) vs inovation (fast); Money and size controls ("making markets"* consequence); use alternatives to legal processes (solution). *We will play here.
Quote from romanus:
Those above without corresponding links to the original ET posts have been purged by ET during the recent system overhaul, or so it seems.
I backed them up earlier - enjoy.
Thanks for the posts - nice work! Only had a couple of those. A lot was lost in the ET purge, they restored some but still lost many threads.
Regards - EZ
Thanks for your considered response; I appreciate it.
We do not do "tuning". We prefer to use binary vectors which assure certainty in the brief period in the future just before the Present and at the other side, the Present.