Ah yes, the dichotomy of the positional trader mentality tightly wrapped around the value long term investor. Believe me when I say it's a strategy that has been designed over many many years of trials and tribulations. As I've always said "I'm a trader by nature but an investor by necessity". And that pretty much sums it up perfectly at least as it's related to Apple.
I can't tell by the words on the page (read that as a forum being very one dimensional) if that is more of a sarcastic reply to my strategy or what I write about Apple or if it's a genuine curiosity about my style. I always give the benefit of the doubt so I'll assume the latter.
I often take my trading positions much like I take my first long term positions, but determining how much I'd ultimately like to hold of a position and then factor in the current market sentiment, individual price action, valuation and about a dozen other things. I often suggest that traders or long term investors break their purchases up intol 3 to 5 smaller purchases. This allows for a good averaging of price while also making sure that one doesn't purchase a 100% position at exactly the wrong time.
As it relates to Apple, I have zero longer term fear of the valuation over the next 24-36 mos. That's not to say that it couldn't drop another 10% or more but as a first position, I would certainly recommend it here without much second thought. The ONLY thing I'd caution against is the end of year manipulation and catalysts that are in play. Even still, that could go either way with the stock.
But for a trading position, unless I'm willing to take ITM leaps, or well out of the money calls, I'm not willing to take another position here until something breaks either way. I'm personally hoping for a sizable volume dip to +/- $490 at which point I'll reestablish a trading position. Whether I add to it or not depends on the price action from that point. I often will average down based on priece action or volume as comfortable. Often times, I'll take it and then sell out if something technically breaks that I'm not comfortable with ... or if psychology turns. This is the part that people like Zax don't understand about this style of trading or me. I can be very excited about a position but when it breaks down, I'm gone unless i have a reason to stay. And in many cases, a loss is sometimes a perfect opportunity to balance out other gains to reduce my taxation.
Do I have fights with myself? Yup, sure do. But not that often related to trading positions vs. investing. I know full well when I'm making an entry why I'm doing it and what I expect. It's why while teach my 13 (now 14) year old daughter that 10 shares of Apple could be a great purchase for her right now ... but 5 may be even better and she can always buy the next 5 whenever she wants ... as opposed to buying 10 now and wishing she had money left if it drops 40 points. And of course, diversity is a big lesson. But I think it's important for her to see her investment account, pick her own stocks and learn about them prior to investing in them .... in addition to setting the goal for that position before she takes the position. These lessons for her are about seeing positions go up, down and sideways and rather than being freaked out, desensitizing to the action and seeing the "what is" that is moving a position. So when she gets to be of age, she's comfortable in the markets.
Being kept awake at night is something I warn ALL traders and investors about ... trusting your gut and staying true to YOUR style of trading/investing. If you are being kept awake at night, then you know something is out of balance? Does it happen to me? Yup again. It's very easy to get excited about a trade opportunity and get heavy. When that happens, you have to trust your gut and lighten up accordingly. That very thing is what does most traders in ... the inability to sell a losing position. I'd love to say I'm always right about a direction but I'm not. Be VERY WARY of anyone that says they are. And we have a couple close by that are complete BS artists in that regard. Stay very far away.
The best thing about trading around long term investment positions is that you can always take advantage of what Mr. Market is offering at any given time and if you miss a good trade ... you still participate with your long term position. Not as fun, but therein exists the truth of the matter.
Cheers.
Tj |
