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Hello Rick,
Not harsh at all.
Comments are interspursed below.
Rick Mortellra wrote:
> Harely, just a few comments noted below. Sorry if I sound harsh.
>
> -----Original Message-----
> From: Harley Meyer <meyer@xxxxxxxxxxx>
> To: Rick Mortellra <rmjapan@xxxxxxxxxxxxx>
> Date: Tuesday, December 16, 1997 12:37 PM
> Subject: Re: Yhoo 3 of 3
>
> >I have read once what a wash sale is but off the top of my head I
> don't
> >know what it is. I think if I clean things up so I don't have a long
> and
> >a short position in the same stock then I should be ok. Right or am I
>
> >wrong. Then I am looking only at profits and loses. But I will look
> into
> >the rule.
>
> STOP TRADING! You need to understand the tax ramifications of this
> kind of
> trading. You could end up paying taxes on non-existent wash sale
> "profits"!
> The wash sale rule also gives individual traders a rational reason to
> let
> irrational losing trades go to find another stock to poach. Swallow
> your ego
> and let go of the bone! You were wrong this time. There are alot of
> other
> stocks at the end of the rainbow.
I will look into the wash sale rule and the tax consequences. I don't
think that this is ego at this stage of the game. I guess I view it as a
learning experience. I don't know if I can say that I was wrong about my
YHOO short at 52. I can say I was stupid for not taking profits earlier
on it.
> >Actually I try to find some very specific times when I short. SO
> >actually it isn't that scary. In fact it is more reliable that when
> the
> >price becomes over extended there is almost always a pullback. The
> top
> >of a channel is a good example.
> >
>
> >This why I like to try to short early. At the top.
>
> Over-extended prices? The bull has death-gored many shorts on this
> idea.
> Already good enough to call the tops and bottoms from the charts too,
> huh?
> Don't take my word for it, read any book on short selling. You are
> shorting
> YHOO for all the WRONG reasons. You've been lucky so far and taking
> $100
> loss is cheap tuition for this lesson. The next time you may find
> yourself
> happily short (or long) going to bed only to wake up facing a 15-30%
> price
> gap up or down because of some "bad" news, even on "solid" stocks. A
> few
> current examples may jog your memory: ASND, CS, OXHP, ORCL, RMBS
Actually I have made 90% of my money by shorting. i.e., I am better at
shorting. As far as being good enough to call tops yes. But it is a
local top. The best indicator is the super position stochastic. Look at
it on the chart some time. If a stock moves above 80 and croses down it
is coming down eventually. So you can check that for yourself.
Bottoms I am not too good at.
I have read the 'Art of Short Selling'. It discusses the fundamentals of
shorting. I however am willing to short from a technical point as well.
YHOO might very well be going to $70.
I know about the nasty gaps up and down. But that can happen to any of
us.
> Rick wrote:
> >>In fact, outside of a few S&P 100 stocks, I trade
> >> Spiders
> >> almost exclusively.
>
> You resonded:
> >I don't have that kind of money. I also think the risk/reward isn't
> >worth it for me. Now if I could buy a 1000 shares of SPY then that's
> a
> >different story. I can now only buy about 150 shares. So 150 shares
> and
> >a 3/4 pt move isn't worth it. I would rather take something that
> moves a
> >bit and buy more or even fewer shares. But hey I am young and full of
>
> >sponk. Probable 5 years from now I will be investing in CDs and Bonds
>
> >because I can't take it any more. (humor here).
>
> Frankly Harley, these sound like words from a posterboy for Gamblers
> Anonymous. You're craving action now, not profits. As a beginner, you
> should
> focus on making good trades. Profits will flow from this.
Actually there is a balance for me of being in the market and having
enough "action' as you put it to keep me mentally stimulated. I know the
difference between throwing money in the market and making poor
decisions vs staying within myself and waiting for an opportunity. Much
like fishing. Sometimes you have to sit and wait.But if you don't get
into the market you can't trade for good steady profits. I am going to
to the books soon so I can see how the trades have been going and where
I stand so far. I don't do all that bad when I stay focused.
> I assume you have a trading account of about $13,000 (150 x $90).
> Let's
> further assume you bet it all (foolishly) on 150 SPY's. Even the most
> common
> textbook money management guideline of a maximum 2% at risk ($260)
> puts your
> stop loss close enough to SPY's daily range of 1.5 points. In short,
> its
> volatile enough to test your trading ideas without killing you off if
> you're
> wrong. A 30% return for just being long makes it even sweeter. Plus,
> most of
> the "news" that drives the S&P telegraphs itself and can reasonably
> anticipated so you can take action. When you trade individual stocks,
> you
> never know when some rogue "news" wave might turn your stroll on the
> beach
> into a nightmare in shark infested waters.
You are correct I have about $13,000 in buying power. My personal
preference for investing is not to throught the whole wad at it. (Unless
I know I am right. Then I'll throught the wad at it.) For example, with
YHOO I am short 50 shares and long 50 shares. I can only work the long
accountt since that is the account with the most money. The other day
when I bout YHOO for a nice little gain I only bought 50 shares and
later sold 50 shares for a small profit, $61. I only buy 50 shares based
upon my ability to average if I need to. If I have to average too much
then I start to worry. But I have been patient.
As far as a $260 loss I couldn't stomach it. A few loses like that and I
would have no money to trade with. Granted cutting your losses and
moving on is good for some. But right now I can't aford it. Although I
am losing time by not making as much money. I am gradually gettting my
bearings straight and I am starting to make some money trading. We will
see as the rest of the week goes along.
I understand the risk of bad knews. But I do have a real time news
service that gives me headlines. Most extremely bad news comes out
before or after the market.
Harley
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