Great post Lost. I read it word for word and with each sentence I became even more confident we have been,and will continue to be on the right track. It's a matter of going right to the source of all price changes, that of supply and demand. Charles Dow understood full well what he was creating 100 years ago and it still hasn't changed. You see P&F was created 100 years ago because there was no requirment by the any government agency for corporations to divulge all information about the company to all investors. It was a closed shop. Only insiders knew the real numbers. The P&F method was developed so the oursider could see what the insider was doing. In essence the nubmers were not important, what was going on with supply and demand of the stock was all important. In the end, none of us really cares about the name of the company we buy, that's cocktail party talk. In reality we only care of the stock goes up if we are long and or the stock goes down if we are short. Look at how irate the DELL thread became with me when I suggested the stock did not have much upside on CNBC. They didn't care that the stock was DELL they really cared that they were losing money big time. If falling in love with the company was what this game was all about no one would care if the stock rose or declined. They would seek comfort in the fact that they owned a nice company that had nice management. Does it really matter if you own stock 101 or 1103, or 12A4?
What matters is you make more money faster then our government or the stockmarket can take it away from you. At the end of the year your account is up or down, that's reality. What you owned to get there has no real bearing. What is important is you moved the Castle, or the Biship or the Queen at the right time and in the right direction in this chess game.
One of the reason the Bullish Percents work so well and have kept us on the mark for the whole life of my company is because they are soulless. They guage the battle between supply and demand without any one player having any more weight than the next. It is generally a leading indicator but what if it lags? So what! By the sheer nature of how it is created it can only be so late. If the market bottoms and begins up, for it to be real, stocks will begin exceeding previous tops. When the 6% net change level is hit, you will be forced to go long the market, so how late can you be, especially with the short term indicators providing early warning guidance. It's ok to be wrong on Wall Street but not ok to stayh wrong. The problem with the indicators Mr. Cramer talks about is they can continue to suggest you stay out of the game when in reality the play is to be long and very long at that. I'm always asked if I think we will see a top in the market in 2000 and my answer is always, "you need to call the psychic hot line for that answer, we don't predict". If the market does top and move into a defensive mode, we'll be one of the first to know. That's it, story over. Many of the Graham & Dodd followers would become much more comfortable if they added a little supply and demand to their mix.
I was speaking to a technology fund manager the other day and this person said they only used fundamentals. Then in the same breath this person said they that they sold stocks in the fund when the price action of a stock become to "act funny". I told this person that in practice they did use technical analysis after all. Think about how much better off this person would be if they used a more refined but simple method of knowing when a stock "acts funny".
Be that as it may "lost" i'm singing to the choir. It's nice to feel calm, cool and colledted about the market.
I was talking to Larry Wactel of Prudential the other day, he is one of the all time greats on Wall Street. I asked him what he thought of the market, he responded "Tom the market is what it is". That really says it all. Tom |
