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Len, again, fundamentals have no bearing whatsoever on downside risk and
upside potential in the SHORT-TERM. Your focus on fundamentals and
bottom-fishing tells me that you are of an investor mindset, so based on all
you have written, you should stick to long-term picks in your trading.
Again, this is my opinion based on MY experience and the very beneficial
tomes I have read in the realm of daytrading and position trading.
Take care,
Paul Szilassy
-----Original Message-----
From: Len Olson <lto@xxxxxxxx>
To: szilassy@xxxxxxx <szilassy@xxxxxxx>
Cc: RealTraders Discussion Group <realtraders@xxxxxxxxxxxxxx>
Date: Thursday, February 04, 1999 8:07 AM
Subject: Re: Hello, Who I am
>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
>> >
>
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