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Strategies & Market Trends : Rande Is . . . HOME
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To: Rande Is who wrote (9257)7/8/1999 9:37:00 PM
From: DlphcOracl  Read Replies (1) of 57584
 
Summer Trading Strategy:

NOT!!!

I would strongly suggest re-reading Rande Is post #9139 again. As radical as cashing out and sitting tight for two or three months seems, try the following exercise: select a dozen stocks that you think will give you maximum return over the next two or three months. Then, go to you favorite financial website and find the one-year chart for each stock. In particular, look at what each stock returned from July 1, 1998 to Sept 1, 1998. When I tried this, not one of the stocks I had selected had turned a profit over last summer.

This does NOT include the panic sell-off that ensued one month later in first half of October when the Long-Term Capital debacle coupled with fears of Russia defaulting loans and Brazil's economy collapsing crushed the Nasdaq and ADDITIONAL 25%! My point? When Rande Is talks about "washing and rinsing" over this summer with almost certain losses as we overtrade stocks, his recommendation is not as radical as it first appears.

I know I'll be sitting on 60-70% cash in my portfolio over the summer waiting for the interest rate/Y2K/resurging Japanese economy/inflation woes to tank the market big-time in Sept./Oct. I know I won't be smart enough to re-invest at the exact bottom, but the steep sell-off and subsequent rebound will be so pronounced that it will hardly matter. Again, look at the one-year charts of your favorite dozen stocks from Oct. 1, 1998 to Feb. 1, 1999. Food for thought.

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