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Gold/Mining/Energy : Strictly: Drilling and oil-field services
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To: Big Dog who wrote (2772)11/6/1997 9:05:00 PM
From: Thean  Read Replies (1) of 95453
 
About investment discipline in the drillers... (Mike, couldn't reply via e-mail, service broken)

Mike, one approach I find particularly rewarding is to manage my drillers positions by keeping a mental picture of risk/reward or upside/downward probability on a daily basis. Yes I do try to time the beginning and end of each short term cycle by using Stochastics and BB in particular but it is harder now because of the involvement of big momemtum money. It was much easier earlier in the year when the drillers were less discovered. Having said that, I still think the short term cycles will continue. One needs to understand the conditions when TA works best and when it doesn't work (e.g. in panic selling and over-exuberance situations). The basic assumption of all TA indicators is that the stock price move in a rational fashion within a set logical boundary. Since the beginning of the year, I found trading the drillers to be more rewarding than buy and hold by >20% todate (used to be closer to 50% at one point). Yet, this is hard work and requires daily 1/2 - 1 hours reviewing daily price movement and TA charts of a list of drillers. I have gotten used to it but it can take a toll in terms of time involvement.

The real key is still discipline. I take small losses early and hang on to the bullrun as long as possible (setting daily stop is the way to do this but I also got stopped early recently). If stopped out and the trend continues, buy back immediately and don't fight the trend. At the end of the day, it is the profit that counts, however big or small. I find emotion to be the devil that raises hell with one's own judgement. This is an old saying but it is so hard to do 100% - "stick to one's own system." Good luck.
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