On this day three years ago this thread was conceived after I got some kick on my backside talking about IBM MSFT INTC and CSCO long, some of these ''self styled dooms day gurus'' like now were short of these stocks than. One thing that has intrigued me always has been the ability of some to be negative on everything and look at huge conspiracies all around and still make money from the short side in what I consider a historical mammoth of a bull run unprecedented in the 11 billion year history of universe as we know from the big bang. Now this exaggeration is intentionally inserted so as to make this run look so unique.
Since that 29th April 1997 this thread is dedicated to 'winners take it all' phenomenon. To small a time but what a period to learn about markets and under-currents that derive these markets. Lot of big hot shots came and left the markets and SI, I survived because I was honest with the markets. Markets rewards intellectual honesty. It is nice to see that my move to DOW and BRK.A was at the lows and from DOW to NAZ was amongst the first, the rotation and interest rates helping techs was total turnabout of my earlier argument in Feb - March that AG is hurting the wrong sectors of economy by raising rates, in those days DOW was selling and Comp was making new highs the divergence between the two was gapping more and more, I called for that well thought fall of Comp and move to GT HON JPM MCD NKE's than as Comp came to touch the 200 days ma I remained bearish on Comp until a day before ECI release, as I said that we can go to 2500 if ECI is strong, but as GDP growth showed me some slowing and spreads on interest rates between corporate bonds and TB's indicated to me the high interest rates collar that corporations are subjected too, I immediately realized that it is time to go into successful techs, ( I am already
in them in my core but now I was talking about trading strategy ), that ECI days my call to get into techs and highlighting the few I liked has given atleast a 10% return in two sessions.
My readings are based on fundamental theories, I am not carried away with a 500 point drop or 400 up, I think basic issues are important for successful investment career, one should firmly plant his or her feet on the ground, in last few years I have seen lot of hot shots coming and disappearing for some one to survive we need the success of yester - years only to be looked as part of academics and urge to do better the objective for future.
The NAZ move over last two days is too premature to be taken any sort credit of, however the underlying logic and the timing of that ' rising interest rates' are not going to hurt techs as much as DOW big caps will be a good stroke of intelligence (gg genius would be too rich a word for too little an accomplishment) if we really take out 4000.
The reason it is important for me is that this was the very same argument about rising interest rate that I used to demolish ( in my own little world of Ideas) NAZ from 5000 to 3000.
My argument in Feb-March that since these internets are basically sum total of 'future cash flows ability discounted to present' the little I know that these discounted cash flows are heavily dependent on 'risk premiums attached to the equity market' and 'current interest environment' and the 'shape of the yield curve with special emphasis on the long bond' that was when Comp was at 5000 once we knocked out the hyper valuations in internet sector the very same argument that I used to sell Comp now becomes the reason to rally for Comp, the last time we rallied in Comp from 2500 to 5000 that was in face of rising interest rates threat, now once correction is induced that argument about higher interest rates will impact the techs the least, regains its validity. So the bkx got sold off and techs got a bounce and this is not going to stop here in my opinion, it has all the makings of good decent run in the core stocks which I keep highlighting.
Now the way to do it is always options, I played on CPTH RAZF options for example, CPTH 45's for 6$ are now worth 19$ however the risk was that 30,000$ I risked on CPTH would have all disappeared if the stock would have headed south from 27$ with in few months.. but the leverage I create is immense 5000 shares to buy would have made me very much expose in one stock in a uncertain market, instead of spending 150,000 $ to buy I use in this market leverage and create opportunities, I am sure that this is a high risk game as I lose a lot of premium on stocks that do not move and fall but the options provide me a play over three to four months without the risk of halving of price, like CPTH may fall to 15 if internet index hits it lows of 450 DOT, but my loss will be limited to 30,000$ that is it I will not lose 75000 $, in markets like this when we are uncertain we should always maintain high cash, look for out of monies calls like NOK 60 at 45 were great, now every move that I did last week looks green but one thing is clear never buy these stocks at these levels always play options on them, if you like a stock too much and it at 50 like VERT or ACOM instead of buying them at 50, go out three months buy some 65 strike calls or even 70 instead of 500 shares buy 15 calls, if this comp has to move you will see that this leverage will give you ability to spread and the big buck. If the market drops at certain ridiculous level than get your real cash out and buy like made, in times like these when we get down to 3000 from 5000 we play these strategies, it was only appropriate to highlight them for the benefit of my thread on happy third anniversary of this nice gentle great forum of exchange..
The parting word would be that for me it is most important to go long or short using some argument if one does it because the charts tell him so than we might be little too late or too early for me it is this ability to impose the fundamentals on technical analysis that certainly helps .. I think you should not worry too much on this lost opportunity of yesterday, you have your cash and that is important market opens every day and once you maintain the discipline you can get on the band wagon once this thing starts rolling above 3865..
I think this is a suspect run until I get my "B" formation calling for the long one so far it is not that formation but good to transfer some money in long options.. |
