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-----Original Message-----
From: Tom Stein +ADw-comfut+AEA-email.msn.com+AD4-
To: RealTraders Discussion Group +ADw-realtraders+AEA-listserver.com+AD4-
Date: Thursday, March 04, 1999 1:25 PM
Subject: Day-Trading/Investing
+AD4-Someone had asked me my comments on the day-trading stuff they had been
+AD4-seeing on CNBC.....Don't you just love how they follow up a piece on...
+AD4-day-trading as gambling.... with a commercial featuring a kid who lives at
+AD4-home being grounded from flying his helicopter..............
+AD4-
+AD4-Anyway.....I thought I would forward my response to the RT forum...........
+AD4-
+AD4-
+AD4-1)In our society the difference between gambling and investing usually
+AD4-depends on the outcome.....if you are making money....you are
+AD4-investing....if you are losing money....you are gambling........
Funny, that's exactly what my wife says when it happens to me.
+AD4-2)My guess is that over 90 per cent of the public believe a stocks' price
is
+AD4-based upon its' earnings.......that is only half of the equation.......they
+AD4-don't understand the concept of P/E ratio.........ie:If company A earns
1.00
+AD4-and trades at a market P/E of 23, then it is priced at 23.00........IF the
+AD4-market P/E becomes 14...which is entirely possible.....that company would
+AD4-have to increase earnings by 65 per cent just to maintain its' 23.00
+AD4-price....more likely is that the price would drop to 14.00 IF it just
+AD4-maintained its' earnings.
The public believes a stock goes up because it has +ACI-NET+ACI- in its name.
+AD4-IF gambling implies misunderstanding the game....then I guess most people
+AD4-who are in the stock market are gambling
My ex-boss who has a law degree and was CEO of a well known hotel chain once
told me he invests in index funds because +ACI-they are guaranteed not to go
down+ACIAIQ-
+AD4-3)Day-trading is NO different than long term investing.......both take
+AD4-tremendous discipline and a STRATEGY to enter....exit....and use
+AD4-stops...........IF anyone is not using a defined strategy that includes
+AD4-entry, exits, and stops....then they ARE gambling whether their time frame
+AD4-is 10 minutes or ten years...........
Absolutely correct. If you chase a hot tip, you are gambling. If you let a
profit turn into a loss, you are gambling. If you allow yourself to take a
blow-out loss (hoping +ACY- praying) you are gambling. If you risk more than
you can afford, you are gambling.
Fortunately, I have never done any of the above (yea, shure) and I know no
RealTraders have either. +AHsAOw--)
Good luck and good
trading,
Ray Raffurty
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