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Scaletrading commodities can also wipe you out.
A technological advancement can completely change the pricing paradigm of a
commodity. The price won't go to zero, but it could fall 95% and never
recover.
The case I have in mind is aluminum. There was a time in the 1800's when
the wealthy kept their aluminum plates alongside their gold and silver
plates. Aluminum was over $100 an ounce, if I remember correctly. Then
the Hall effect was discovered, which allowed Aluminum to be extracted
cheaply from aluminum oxide ore, which is extremely abundant. Aluminum has
never gone back up.
With rapid advancements in biotechnology and nanotechnology, I forecast that
by 2050 several commodities trading today will lose most of their current
value, never to return.
Robert
P.S. As was pointed out, scale trading individual stocks is risky -- Even
more dangerous than scaletrading commodities, IMO. If you put a gun to my
head and forced me to scale trade something, I guess I would have to pick a
broad market index, like the S&P -- The market always comes back sooner or
later.
> ----- Original Message -----
> From: <Scaletrade@xxxxxxx>
> To: <ist@xxxxxx>
> Cc: <realtraders@xxxxxxxxxxxxxxx>
> Sent: Thursday, April 13, 2000 12:43 PM
> Subject: Re: [RT] Re: OPT - averaging down on MSFT leaps
>
>
> > I agree with you on one point for sure. I would be very reluctant to
> > scaletrade stocks. Commodities, however, will never go to zero...almost
> > guaranteed. Certainly there are still problems: carrying costs,
> commodities
> > that trade down to below multiyear lows, and stay there incredibly long
> > periods of time, etc. But overall, most of my nicest profits have come
> from
> > scaletrading commodities. Of course that doesn't keep me from still
> working
> > on other approaches.
> >
> > Larry
> >
> > In a message dated 04/13/2000 11:53:16 AM Pacific Daylight Time,
> ist@xxxxxx
> > writes:
> >
> > > Scale trading makes one very bad assumption. That what goes down must
> at
> > one
> > > time go back up. That isn't always the case. And if it goes up, it
> might
> > > not go
> > > up far enough to bail you out. I am personally familiar with one
party
> > who
> > > scale
> > > traded into 250,000 shares of stock and is still down over
$1,000,000.
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