DAYTRADING: The Highs And The Woes 3/9/03
I had a dream last night. A whopper. So I did what I always do when I’m in crisis. I hustle to my shrink, doc Kronkite, the shrink-to-the-traders. He’s a specialist you know.
A little background: It was 3:00 a.m. I called him, woke him up. He was not pleased. He was in the midst of a dream.
“Doc,” I cried, “I’m in crisis!”
“Crisis, schmisis. You have more crisis’ than MICHAEL JACKSON. See me tomorrow morning. I can fit you in at 10:00, between Michael and Robert Blake. Five minutes I’ll give you.
“No. I must see you now!” I hollered and hung up.
I ran four red lights, two stop signs and left a State Trooper in the dust.
I made it in record time, banged on his door. The doc greeted me with a nasty scowl. He was still in his pajamas. Strange pajamas: five photos of his hero, Sigmund Freud, cigar in hand, were strategically placed, held by duct-tape looked out at me. I was nonplussed.
I flew into his office, dropped down hard on his lumpy leather couch.
“Talk on me already about your dream,” he demanded.
“Doc, it was awful. I woke up with the sweats.
“Talk on me,” he said, reaching for his pad of paper and his sharp #3 Eberhard Faber.
“It took place at CNBC. Maria was interviewing Dortmunder. Dorty of course was impeccably dressed in his three-piece Savile Row suit. In one hand he had his favorite bombershoot, and a raspberry scone in the other. He was speaking in his clipped British accent. I’ll relate the interview word for word.
Maria: “You’re a chimp!”
Dorty: “Quite. How observant. Does it bother you?”
Maria: [ignoring this] “You’re a trader?”
Dorty: “Indeed. As you are a rumor-monger.”
Maria: [scowling] “ I simply pass along good information I garner from the floor.”
Dorty: “Your good information is bad information. The boys on the floor feed it to you so you’ll feed it to your listeners that they may take the wrong side of the trade; to remain marks, pigeons; to lose money.”
Maria: “That’s absurd you chump chimp.”
Dorty: “You’ll intone, in that whispery excitable voice that a floor trader just confided that they’re buying AVID or RGLD or EQTY. So your listeners load up on these stocks while the pros sell into the buying. It’s an old game, and rather effective.”
Maria: “Where’d you get that ill-fitting suit?”
Dorty: “Where’d you get that hair-do?”
Maria: “I like to look nice. The producers think it’s important.”
Dorty: “I’m sure of that. Here’s a rumor for you: The word on the Street is that all females hired by your firm are not chosen for their perspicacity; not for their market knowledge; nor for their ability to help viewers make profits. They are hired, so goes the rumor, for their sexual-quotient. To wit: Does the male viewer want to boink ‘em? No boink no hire.”
Maria: [furious] “That’s ridiculous.”
Dorty: “Just a rumor. You do look lovely today. Love your hair and those pouty lips. Say, how ‘bout dinner tonight?”
Maria: [ignoring his last, but smiling] “So where will the market be a year from now?”
Dorty: “You jest.”
Maria: “I never jest.”
Dorty: “It’s not possible to know where the market will be in a year. It’s not possible to know where it’ll be tomorrow. The wire-house experts know. And the fund fellows you trot in here
one after another. And lest we forget Mendelbaum-the-fund manager.”
Maria: “Mendelbaum? Never heard of him.”
Dorty: “He’s the chap who loaded up on INTC at 70, GNSS at 60 and MCD at 40. Bought ‘em all the way down. Average Down is his motto.”
Maria: [stridently sarcastic now] “And would you care to impart your expertise to our viewers?”
Dorty: Ok. Trade both sides of the Street, short and long. The short side is often the nice side. When buying always average UP, never down.
Maria: “Short? You go short? A short can go to the sky!”
Dorty: “The sky? Just a myth. A short that goes against you is a trade gone wrong. Cover, take the loss. Say, how ‘bout dinner?”
Maria: “We are not here to tell our legion of viewers to take losses.”
Dorty: “Mmm. I suspect your legions, you really have legions? have taken a loss or two the past three years.”
Maria: [caustic sneer] “Anything else?”
Dorty: “Indeed. Exit positions by 4:00 p.m. Bad stuff tends to happen after the market closes; warnings, earning misses, downgrades, accounting irregularities, rumors, shocking economic numbers prior to the next day’s opening. And let us not ignore the corporate CEO who absconds with millions and his secretary with a one-way ticket to Rio.”
Maria: “You don’t like stocks, do you?”
Dorty: “No. There are but two reasons to own a stock; for the dividend and most companies don’t pay any. The average dividend is slightly more that 1%. The other reason is the hope that you can sell your stock to someone at a higher price.”
Maria: “Are you finished?”
Dorty: “No. There is the company and there is the company’s stock. They are two very different animals. Buy, trade the stock, never the company.”
Maria: “So you ignore fundamentals?”
Dorty: “Yes. I’m a trader. I look at charts, try to locate high probability chart patterns.”
Maria: [deep frown] “I’ve heard quite enough. This interview is over chimp.”
Dorty: “Ok. But how ‘bout dinner?”
I looked at Kronkite. “Well doc, that was my dream. What does it mean?”
The doc gave me a funny look, said, “Sometimes a cigar is just a cigar. Now go home.”
“Sure doc. Thanks.”
Lee Kramer
Copyright LSK, Ltd, 3/9/03 |
