DAYTRADING: The Highs and the Woes 3/29/03
My trading partner, Dortmunder, said in that clipped
British accent, that I think may be an an affectation, "Are you ready to do battle?"
"Battle?" I asked, baffled.
"Battle, war," he said, "You do know what doing battle means?"
"I'm glad you asked me. Because I'm concerned, confused and confabulated by this war. I can't sleep, I can't eat, I can't boink. War is a terrible thing."
"Boink?" asked the little guy. "The word cannot be found, I assure you, in the Oxford dictionary."
"No, boink was coined by Benny Boink. It refers to one who is engaged in sexual congress."
"You chaps on this side of the pond are a strange breed. Have you asked your quack shrink Kronkite about your boinking problem?"
"Of course. He told me to find a hooker; that a hooker would fix the problem. I told him it was out of the question, that Suzy would know immediately. "That's ridiculous," he said. I told him that Suzy knows everything; that she's a specialist. "No doc," I said, "hookers are out."
"Are you quite finished? Can we resume our discussion of doing battle, going to war?"
"Sure, sure," I assured him. "It's these darn euphemisms I keep hearing; friendly fire for example. A guy on your team shoots you and they call it friendly fire? Seems pretty unfriendly to me."
He ignored this. "May we continue with our discussion of war?" he asked, clearly annoyed.
"Yes, yes. Continue, please. But Dorty, I'm a day-trader, not a warrior. What does this have to do with war?"
"Everything my good fellow. We go to war every day."
"We do?" I asked
"Indeed."
"Mmm."
"And our first preparation is our uniform and requisite battle gear."
"Right. Er, Dortmunder, you kinda lost me there. Uniform? Battle gear?"
"I prepare each morning by carefully donning my three-piece Savile Row suit. My cravat is windsored with painstaking care. My bumbershoot is by my side. My bowler is set squarely on my head."
"Mmm. I have noticed this," I said.
"You, on the other hand, throw on clothes that are clearly carryovers from the '60's. Your shirt is unpressed, your hair flies hither-and-yon. You wear sneakers! And that cowboy hat looks as if it has been trampled by an angry bull. You slouch in your chair. I find it all quite appalling."
"But I'm comfortable!" I cried.
"When one prepares for war, one does not consider comfort."
"So if we're going to war, who is the enemy?" I asked.
Slamming his bumbershoot on the desk we share, facing each other, he said "The enemy is the crowd that each day seeks to take, no make that steal, your money."
I was shocked silent. But only for a moment.
"There are people who try to take my money? Who? Who are they?"
"They can be found on the Street. This is the battleground. This is where the war takes place."
"Yes, yes, but who are they? I cried again.
"You don't know who your enemy is?" he asked, incredulity spreading across his face.
"No. I have no clue. Tell me!"
"First, the analysts. They upgrade a stock, they downgrade a stock. Ever notice what happens when an analyst downgrades a stock? You go to bed holding 1,000 shares of a stock, wake up the next morning to see your stock down 40% because an analyst has issued a downgrade."
"No!"
"Yes."
"Or an analyst will lower his "target" from $40 to $30 and your stock opens down 50%. And of course the analyst downgrades and target changes usually are announced after the market closes."
"No!"
"Yes."
"Who else? I asked, beginning to tremble.
"CNBC," he said. "Maria passes along rumors. "I've just been told," she'll say, "that the traders on the floor are buying SIMG." It may be SIMG or NITE or this or that stock. If you buy it, you've just been ambushed, and your financial wounds will hurt."
"No!"
"Yes. Then CNBC will bring in the experts, the fellows who, instead of spending their aftenoon at a movie or at a Times Sq. peep show, tell you what stock to buy, and why. "Well, U. S. Steel has dipped from 42 to 10, but I spoke with management and they assure me that business is looking up. The stock will likely make new all time highs within the year. Their revenue numbers were up by 3% in the forth quarter."
"Gee, Steel sounds good. Think I should buy a few thousand shares here. Looks cheap."
I pulled the point of Dortmunders's bumbershoot out of my arm. It didn't hurt much.
"Was that really necessary Dorty?" I asked.
"Yes, it was," he replied with narrow eyes and scowling face. "Then there are the MM's, the Street's weapons of mass destruction. Thieves, burglars, goniffs all. The Tower of London is where they belong. The isle of Elba is where they belong."
"Gee Dortmunder, aren't you being a bit harsh?"
"No."
"Are there any more enemies?" I asked.
"Yes.The hedge-fund managers. They will trample you like a herd of charging water buffalo."
"Speaking of water-buffalo. Do you know how to stop a charging water buffalo? Take away his credit card."
I got a strange look from Dortmunder. "Are you quite through? May we continue?"
"Ok," I replied.
The hedge-fund can go long, they can go short. And when they move they can kill you. You must hide in the bushes, become a guerrila-warrior,think what their next move will be and out-think them."
"Me out-think them? Mmm."
"Then," continued Dortmunder, "there are all the fund-managers and corporate CEO's who line up on CNBC, like pigs, snout-to-tail. The fund managers will speak lovingly of this or that stock hoping you'll buy it so they can sell it to you. The CEO's speak glowingly of their companies, hoping you'll buy their stock to prop it up and keep their stock options above water."
"Gee Dortmunder, is this true? I'm shocked."
"You should be. Most investors and traders don't have a chance. Better you should stand in front of a fast-moving tank heading toward Baghdad. Better you should stand on the roof of a building with a 2,000 pound bomb aimed at your head."
"Gosh Dortmunder, you've opened my peepers. We really are at war. Can I offer you a raspberry scone?
"Indeed."
Lee Kramer
copyright 3/28/03 |
