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Strategies & Market Trends : Wedges, triangles, and stuff: Chart patterns for breakouts
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To: Mana who wrote (178)7/20/1997 12:17:00 AM
From: HeyRainier   of 257
 
Chris, I've also been watching AEIS; I always seem to find it on the "new highs" list on SI. My advice on it(and short selling in general) is to never go against the trend. You yourself have recognized the trend. Some of the most successful professional traders in our time take to heart the phrase "The trend is your friend" and develop trend-following systems to extract tremenous profits from the markets. I haven't looked at its fundamentals, but it sounds like the Greater Fool Theory is taking place if valuations have come this high.

Short selling is perhaps one of the hardest things one can do, especially in a bull market as crazy as this one. If you've been watching CNBC, they had a brief special about the "short" money managers, and they composed the biggest losers during the 90's. I've briefly found myself in their company when I've tried to short a stock just based on valuations. You'll find other professionals agreeing with that outlook if you take some time to read "The Art of Short Selling" by Kathryn Staley. Even Soros, the greatest short seller of them all, calls it one of the most difficult things to do in the market. Buffett and Graham have come to the realization that short selling is best applied to broad market indexes, so you both spread out your risk and never get killed on a single stock(like the types that jump or double in a few weeks; nor will they get bought out through an aquisition; that would hurt)

Bottom line is, I don't recommend doing it unless you're a professional(and they've already shown how successful they are), so I will not attempt to provide you with fuel to feed your fire. It would be hypocritical on my part if I do otherwise.

Regards,

Rainier Trinidad
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