OT RtS,
Good post. I disagree on a few minor points.
I don't think AD ever departed from his basic style. His trading was sui generis and playful. It lacked mechanical rules governing stop loss and the usuals. He almost always used the "double-or-nothing" trick to get himself out of tight situations and he had deep enough pockets to do it successfully on most occasions. Like Houdini, he was a bit of an exhibitionist who displayed a knack for getting out of boxes. It's amazing to me that he made such good money shorting AMAT on its way up from 11 to 18. The only consistency of his style is that he broke all the rules.
On Cary: I could not agree with you more about his lack of diversification or his conventional fear of shorting. Those tendencies used to drive me crazy because I absolutely idolized him, and still do. To me, Cary is almost an icon. How can you not love a guy who needs to follow a company for a minimum of ten years before he believes there is enough data for him to consider it worthy of inclusion in his sacred portfolio? He is the classical MIT marathon man. I don't remember if you were around in '96 for his kickoff of the Blood thread. It was so refreshing for me to encounter someone who was so bright and so transparent, so disciplined and deliberate, with the patience and common sense of a saint. "This is my long range plan...these are my tactics...I am now executing...I bought at P...if I'm lucky I'll go for more at P-5...Just bought more at P-5...if I'm really lucky I'll get more at P-10 although I know in the short-term I will feel regret. But my target is P+30 and here's why..."
The thing about Cary is he is extremely conservative. That's why I used to bug him about diversification, because it was like so illogical and hence heretical to someone who stood for systematized diminuition of risk. I mean like why manage a semi equip sector fund in a downcycle? But he has evolved. He got into FPGAs and certain other semis, companies that are as solid as a rock. All I can say is that he has proved that he has a good sell discipline. His timing at the top was not perfect but it was pretty darn good. You would think that he would just take the money and park it as far from tech as possible until it was time to load the boat again, and he did, in cash. You and I might go for dog food companies at this point in the cycle or maybe used car dealers, but Cary has to love a company to invest and love is basically forever. This is not a sport to him. His idea of fun is being loaded up in CDs yielding 10%, not playing musical chairs with a bunch of techie time bombs. Anyone with real industry experience in the field that he invests in is a valuable asset to these threads but Cary's value IMO is his integrity.
Invest in stocks in hot industries that are receiving increasing investor speculation near the beginning of such moves as you do.
Yeah, I get lucky once in a while as I did with nanotech last year and TINY, which was almost a triple for me. You correctly categorize me as a theme investor. Generally I am looking for a theme that is earning real money (like say Indian outsourcers) rather than simply the next hot thing. So far nanotech is just the latter, but it just depends on the time horizon of the investor. I used to pick a stock like TINY and just stay with it forever, but often the company goes belly up, which is always a risk with companies like this. So I learned to read charts and move my money around a little bit as I did on its recent volatility spike. Maybe I will get back in later if it gets to single digits.
The Indian outsourcing theme that I am playing with SAY and INFY has lots of neartime headline risk that is keeping these stocks down this election year. LT I am very bullish. These are good companies and I feel really good investing in India, which, unlike the USA, is really getting its house in order, setting a sustainable growth trajectory.
If you really want to know how pessimistic I am, one of my best positions is a lottery system operator called G-Tech (GTK). It's basically a bet that politicians will find it more palatable to meet rising deficits with hideous forms of gambling (voluntary taxes) than either lower expenditures or raise taxes. Right or wrong, these are some of the themes I am investing in.
I like TA as a supplement to FA, for timing entries and exits, as you put it, but would not attempt to put too fine a point on it. The simpler the better since part of the reason why it works is that people think it works--kind of a self-reinforcing belief. All I can say is that in the LT economics rules and in the ST psychology rules. I think that successful investors really have to bifurcate and try to understand the various and sometimes conflicting forces at work in the market. For example, momentum is one serious force. But so is the urge to nail down profits at some point. In my younger days, I would be all over the short side of plays like NFLX and TASR. I really like to experiment using different strategies to see what works. Shorting stocks in a bull market, even stuffed pigs, is one that didn't work for me. At their best, these threads are places that speed the learning curve, where we can engage in frank dialog with other investors so we don't have to reinvent the wheel.
Please don't talk about MEDI. <g> If I buy a biotech company, sell it and you will make money. Even Biomaven's help can't turn that around. <g>
Cheers,
Sam |
