|
PureBytes Links
Trading Reference Links
|
Dear Paul,
The reason I concentrate on fundamentals is to minimize downsize risk.
If the company is solid financially AND makes timely SEC reports, to me
it means that that it is a real company that is either making money or
is in a position to weather a storm. Secondly, when a company such as
this is in a sector that has been beaten down that adds further support
to the stocks bottom end, again minimizing risk. To me, if you do not
spend the time to thoroughly research a stocks fundamentals, reported
results and consistency with the business plan, then you are truly
speculating. Unfortunately, true speculation is simply gambling. I
gamble at the poker table, not my capital.
BAMM is a good example, and I did research that pick. When I saw its
financials, (breakeven at best), I was not impressed. More importantly
when I found that the insiders were selling better than half of their
position, I knew it was fly by night, and I passed on that one.
Of course, I know that the stocks are manipulated which is the basis for
even having a market, but I prefer to go with companies that I feel
comfortable with, (namely, consistent performance, followed very
closely by price action and volume). This approach works very well for
me. I will leave the AMZN and SIEB to others. Sure, quick rise, but
devastating falls. I like to pick up a grain of sand every day.
I appreciate your feedback and look forward to future exchanges. Take
Care.
Szilassy wrote:
>
> Hi Len,
>
> With all due respect, if you are engaging in nothing but daytrading and
> speculative position trading such as that you describe, you are wasting your
> time reading SEC reports and poring over fundamentals. That information is
> for long-term investors.
>
> Initially it was hard for me to make the transition as well, but currently -
> aside from reading as many news blurbs as I can before and just after the
> open to determine which stocks are in play - I rely entirely on a very
> simple form of technical analysis which incorporates nothing but price,
> volume, and a filter or two. With all the manipulation by market makers and
> our breed of trader (which last I read, was estimated to be 5 million
> strong!), if you want to be successful, you have to forget about the fairy
> tale concept that fundamentals will move share prices regardless of time
> frame. Buy some books with time-honored success, common sense, and
> simplicity to the approach (Joe Ross and Mark Cherlin have recently
> co-authored several like this - I have read two of them, and they are
> excellent). You will not regret the few hundred dollars that books such as
> these will cost, as it is an investment in your future.... not to mention a
> tax write-off at year-end if you qualify for trader status.
>
> I use the term speculative above, as your NBR trade could have JUST AS
> EASILY turned around and left teeth marks on your posterior. Trying to
> pretend that you are "smarter than the market" is one surefire way to lose
> your trading capital - trust me, as I suffered from a similar delusion
> previously. Market inefficiencies exist because of short-term manipulation,
> pure and simple. Study the recent examples of BAMM, AAGP, DLIA, etc. and
> the current situation with JBOH for your own confirmation. The sooner you
> can accept this most basic tenet of short-term trading, the more likely your
> success as a trader.
>
> Happy trading and best regards,
>
> Paul Szilassy
> -----Original Message-----
> From: Len Olson <lto@xxxxxxxx>
> To: RealTraders Discussion Group <realtraders@xxxxxxxxxxxxxx>
> Date: Wednesday, February 03, 1999 3:34 PM
> Subject: GEN: Hello, Who I am
>
> >Greetings to All:
> >
> >I am new to this forum and wanted to introduce myself.
> >
> >Like alot of traders, I am a disillusioned professional who wrestled his
> >money away from a traditional broker a few years back. I found out that
> >I pay more attention to my investments than he ever did. Result, I now
> >do better. I like to think that I have made every mistake in the world
> >when it comes to trading. Of course, that is not the case:
> >
> > Here's an example: I bought NBR on a Thursday about two weeks ago based
> >upon my belief in the company and the fundamentals, regardless of the
> >analysts. I had trouble getting to sleep that night. In the morning,
> >my brother brought me out of a daze with a phone call at 8:20 central
> >time and said "NBR gapped up 3/4". So i thought man I need to trade.
> >(I'll take a .50 profit in less than 24 hours anytime). So, I stumbled
> >out to the office, turned on the PC, and tried to sip coffee while my
> >vision cleared. As soon as I was logged on, I went to the trade screen
> >(WebStreet). What I didn't understand my brother to say was that the
> >stock gapped up 1 1/2 to 14 3/4. Well, I got a little excited, (vision
> >still blurry, still medically asleep).
> >I placed my order. I received a notice that my order had been
> >received. (When a stock gaps up like this, I usually place my sale at
> >the current bid to move it). This long story shortened: I forgot to
> >change the trade to a SELL from BUY. I ended up buying another 1000
> >shares at 14 11/16. Thankfully, I did sell the first 1000 at 14 1/4,
> >and I was able to average the second 1000 down at breakeven. I lost a
> >$750 opportunity, a gift.
> >
> >I track approximately 20 stocks religously spread between airlines, oil
> >services, retailers, and technology. I steer away from e-commerce
> >companies unless based upon solid brick and mortar operations. I will
> >not trade a stock unless the fundamentals and SEC filings are 100%
> >solid. I do not give alot of credence to analyst, because they are
> >driven by other factors and influences which IMHO tend to stray from
> >true basic analysis. Here are some of the things that I look for:
> >
> >P/E preferably 10 to 15, up to 20
> >D/E under .8
> >SEC all filings on time, without nonsense
> >Mgt in line with business experience and business plan
> >Growth between 12 and 20%, less is insufficient, more is probably an
> >anomaly or at a minimum posing problems for continued expansion
> >Price between eight and $22
> >
> >The most important factors for me are daily price action and volume.
> >Price action provides the opportunity to take advantage of daily highs
> >and lows, and volume provides the ability to sell a stock. My average
> >holding period is 1.3 days, and my average profit margin is 1.6%. I
> >like companies that do not have alot of news but show consistency. I
> >generally trade in blocks of 1000 to take advantage of small moves.
> >However, I have been known to take larger positions and wait. I am
> >currently tracking ALLC, BJS, NBR, PESC, CD, KM, HAST, RMDY (which I
> >should have trusted my instincts on), TWA, PAIR, and EVER.
> >
> >My goal each day is to select four or five stocks to play. I attempt to
> >make 2% in each roundtrip. If you are about to make a mistake, I have
> >probably made it. I truly appreciate educated criticism and
> >suggestions. I call my approach "Grain of Sand".
> >
> >Take Care
> >
|