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----- Original Message -----
From: "Brian Keith Voiles" <admagic@xxxxxxxx>
To: <realtraders@xxxxxxxxxxxxxxx>
Sent: Wednesday, April 03, 2002 1:54 PM
Subject: [RT] Any Reason for Slow Spoos Today?
> Just wondering why things are so thin.
> During lunch there were at least 6 individual
> minutes of ZERO movement.
> Thanks,
> Brian,
Welcome to the post bubble stock market. Please consider the mania
whereby taxi cab drivers and PhDs were quitting their jobs in order to trade
the stock market. Now consider that the bubble has burst. Look at previous
bubbles and see what happened and how long it took for the effects of the
bubble to completely unravel after the initial peak. In contrast, it took
these same people 20-25 years, after the 1974 bottom, to decide that the
stock market was the place to be. Gold peaked in 1980 and has yet to come
close to making new highs, In fact, I would guess that every peak in the
Gold market has probably been a lower peak. But direction is not the only
measure of profit opportunity. A bear market with volatility can be just as
profitable as a bull market. So, given the implied pendulum effect of
profitability, one can look forward to the stock market generally grinding
away in slow tortuous manner and therefore grinding away most stock traders'
capital. This could go on for years.
What to do? Look for other markets that are not in a post bubble mode and
that present a potentially favorable risk reward opportunity. Anyone notice
that lately the some of the best performing stocks are commodity based?
Perhaps commodities are the place to be? If properly positioned, one can
buy a severely depressed commodity and not have to bother with trading it
for months until one's profit target is met. For example, October Sugar is
now near 5 cents. There is a reasonable risk for a drop down to 4 cents but
it could easily go back to 11 cents over the next 2 years. Each contract is
112,000 pounds of sugar. So each 1 penny or 100 pts movement is $1,120
profit or loss. I see a potential 1 to 5 risk reward here. But, it will take
patience. It may take 1-2 years and you will have to roll to forward
contracts twice per year. The good news is that you won't have to worry
about phony earnings or funny accounting. People love their sugar during
good times or bad times will continue to consume sugar. This was just one
possible example that may get you to think outside of the "stock market
gotta trade today" box.
Cheers,
Norman
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