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In a message dated 2/28/00 10:41:18 PM Pacific Standard Time, GREHERT writes:
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JR: I've read your emails and am impressed with your trading
concept but 1.) why are you giving the idea away - popularity will surely
kill it;
JP: Reasons I am freely sharing this information with others:
1. I have been very fortunate,..used this methodology to make plenty
over past years,...in a big way this is my way of giving back. I can't
go to my kids school PTA meeting and say here is an idea for a
fundraiser (using overseas follow through,..etc.) but I can share the
insight with others on RT. Others have shared with me, and I would
not be where I am if that were different....below is an excerpt from
previous post. Also RT forum could use some "free ideas" that work.
2. The demise of the "loophole" that allows this risk averse,..highly
successful strategy is assuredly guaranteed. It may be round the
clock trading,..or it may be a universal effort by fund companies to
stop short term trading through either:
a. imposing read end loads on fund shares not held a certain amount
of time (like Invesco has done with ALL their International type funds)...or
b. creating a rule like all International mutual fund trades must be
placed by 7am EST,..etc. BUT IT WILL NOT BE BECAUSE OF THE METHODOLOGY'S
POPULARITY WITH INDIVIDUAL TRADERS.
There are ways the fund cos. could stop the trader's ability to go
after overseas follow through,...BUT FOR THE MOST PART THE FUND
COS. HAVE ONLY GONE AS FAR AS TO LIMIT OR RESTRICT THE
FREQUENCY OF EXCHANGES. Really a minor problem,...as accts
can easily be moved from one fund family to another.
3. The overseas follow through methodology can be equally effective
in a Bull or Bear environment. Risk can be curtailed by establishing
a "higher hurdle" as I mention toward the end of the paper. You can
set the hurdle so high that you may only chose to pursue 1-2 overseas
follow through trades per year....say if the FED were to lower interest
rates unexpectedly at 2:15pm (this has happened) and we rokey up
20-30 S&P500 points in the S&P500,...and all indications are that
overseas markets will rocket higher also when they re-open,..etc.
..that is a once a year type set up,...I have seen one night gains
of 4-6 %. Coming off the lows in 1998 was another time where huge
gains could be had for free. So this does not have to be constant
short term trading approach,.it could be very selective and infrequent
that you chose to accept,....just the huge gainers,..etc.
4. Lastly,...IT IS YOUR MONEY,..AND YOU HAVE THE RIGHT TO
TRADE IT AS YOU PLEASE. You'll find that mutual fund companies
tend to "feel" very powerful at bull market peaks,...and will impose all
kinds of restrictions,..including restrictions on incoming money flows,
.or limiting the number of exchanges,..etc. Whereas in bear markets,
..the funds welcome new money and hassle you much less over the
frequency of exchange issue. Bottom Line,..the rules or restrictions
regarding frequency of exchanges exists,..and you have to work around
them,..but it is your money,..and your decision. There are tons of good
mutual funds,..even at 4 to 6 trades per year each.
JR: ...and 2.) what broker allows the frequent in and out trades in
international mutual funds needed for your method?
JP: My opinion: ...the methodology I have outlined in the paper on
trading overseas follow through works best in tax deferred accounts
which have no limitations on frequency of exchanges. For instance
my 401-k uses American Funds,...and several Variable Annuities
(which have a good menu of International type Growth funds) also
allow unlimited exchanges. Most TAXABLE accts with a "brokerage"
type supermarket will be subject to the T+1 settlement hold rule,....
meaning shares have to be held for two market days. Still not the
end of the world considering that they can be traded on margin. With
Mutual fund families themselves,...the restrictions may or may not be
enforced,...often it depends on the size of the account,...level of
abuse,..etc.
Many have a policy of 6 or 12 exchanges per year,...and let it go
well beyond that before they will give you "heat" over frequent
exchanges. I find it is worth my time to move taxable accts as
much as possible to ensure that I have the ability to place trades
as needed. The opportunity is too substantial.
JR: Good trading
JP: You too,...as well as other RT'rs.
Jim Pilliod....jpilleafe@xxxxxxx
*********************************************************
P.S. Excerpt from previous post dated 01-22-00,
regarding "Importance of Sharing of Ideas"...(my words):
..........So life need not be "one big advertisement".
Specifically in the world of Technical Analysis,...let me give
you an example. The Market Technicians Association MTA
sponsors an Internship Program,...and as an affiliate member
in 1992 I was selected as one of the first to go through the program.
The instructors "mentors" were top in their positions...Alan Shaw with
Smith Barney,...Phil Roth with Dean Witter,...Ralph Acampora with
Prudential,...Steve Shobin,..etc. These are very busy "prominent"
people who for a several day time frame each set everything else
aside to teach a novice,...someone they would likely never see again.
During a three week period these "mentors" gave selflessly,...sharing
in their methodology and work, favorite methodology,..insights,....
nothing was "proprietary"....off-limits,... or unanswered. These
instructors gained nothing in return from this effort,...except perhaps
to instill the same desire to share knowledge and success to the intern.
It worked for me. After the internship,..I went on to become quite
successful in part due to insights I gained from the internship
experience. More importantly,...I learned the real value of sharing
knowledge and helping others....expecting nothing in return, just being
appreciative of the opportunity to give back..etc.
**************************************************************
Also,...I am not affiliated with the Market Technician's
Association (MTA) but would highly recommend the
organization to anyone seriously interested in working
in the financial markets.
Like anything else,...you get out of life what you put into it.
MTA site is www.mta.org
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