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Hi DIMITRIS,
Monday, June 30, 2003, 8:56:05 PM, you wrote:
DT> As for the Dave´s comment, what would "the first 6-year-old
DT> child" say back in Jan2000 for the present "trend"?
I'm surprised at you for such a question. ^^_^^
The child would have said "up". (And, the child would have been
right, and, if the trader who queried the child managed both trades
and money well, the trader smart enough to listen to the child would
have made money . . . until about 2 months later when the trader
would have suffered some losses, the magnitude of those losses
depending on the traders discipline and money management techniques.)
The child eventually would have said "down" of course, and the only
question is, what is the child's "look back period", and I said this
is the real basic choice one has to make. You make this choice based
on your capitalization, and your capacity for risk, and your
emotional temperament, or on some combination of those things. One
size does not fit all.
And what if you'd asked that child the same question some time early
in '99? Or '95? Or '96? The child would have made a fortune for
you. Of course the child will ultimately be "wrong", because every
trend, every single last one, will eventually turn. And no one knows
when that is finally going to happen.
We can certainly make educated guesses about it, but we certainly
cannot prove that a trend will end at a particular point in time, or
that it will not end. So, no "proof" about trend exists, in my book.
What exists is evidence of trending and non-trending periods. When
we see evidence of a trending period's beginning, we want to ride
that trend. What is that evidence? I believe I stated this. Basically
a directional move that survives a counter move and then goes on to
continue to plow new ground in the same direction. And it's just
about that simple.
Flawless? We both know much better. But it's about as basic as you
get in this business, and it's certainly something that can pay a lot
of bills. People lose money constantly in this business trying to
predict trend changes (they get out too early, and vertigo keeps them
from ever getting back in, or even worse, they take a position
against the main trend, and get chewed up time after time after time
trying to guess the turn, instead of betting that the trend will
*not* change, and being willing to take the loss when that bet
finally fails, as it eventually must).
I'm long a bunch of stuff right now that I'm not particularly too
happy about. But it keeps making new highs after pullbacks. I am not
about to lose money watching it continue without me, or trying to
short it because the "valuation" is too high. I will continue to
take money off the table to lock in profits, and eventually I'll get
blown out of the remaining positions, one by one. C'est la vie. So
I have no opinion about this current trend. I only know that at the
moment it is ongoing. I found long ago that opinions about the
market cost way to much money in carrying charges. Opinions often
make it psychologically very difficult to do what I absolutely must
do in order to succeed. So I try, very very hard, not to have any
opinions.
Will happily look at the other thread you referenced when I get a
chance. You always have interesting and good ideas, DT. But
sometimes simple is very, very good. ^_-
Best,
Yuki
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