Lesson # 46, last follow-up to # 44 and # 45: to all, and Mike: after re-reading my missves to you, it may not have been clear that: I also added MAVK, UTI., NSS, in their "stage 5 or 6 Oil Svc./Steels groups recently near correction lows, for likely upside bounces", and that you are sharp for noticing this also....it's just that, I prefer the more-depressed issues in those groups, vs. GLM, and, that, I also prefer even more, historically, issues which are REALLY a ton more depressed, in bases, over ANY "stage 5 or 6" issue, technically, for longs....they WILL bounce from last weeks lows....but the question for me, is, which issue to choose ? in stage 5 or 6 ? or in stage 1 or 2 ?
* second, a actual, true story: in 1980, I moved to Calif., and immediately, approached all Oil Svc. co. execs I could reach, telling them oil (then 40 a bbl.) would drop a lot hence....I finally got two men, one the founder of GLM, the other, an exec. at Fluor, to at least hedge their positions with puts....when GLM fell from 40 to 9, Mr. GLM gave me money to manage, and when FLR fell from 60 to 10, so did the other man....but, and here's the Lesson, I think: Both, said the same thing to me, at 20 on GLM, and 40 on FLR, on the way down, which I teach in my "Lessons":
* both men said, "but Jim, how can you possibly think these might go even lower ? gosh, look at their "fundamentals"....you are not even acknowledging their financials, earnings, etc., look how "cheap" they are, after their "big" correction"....
(note: people ALWAYS SAY THAT in stage 5 or 6 on the way down !!!!)
to which I replied, "I am not necessarily saying these issues will fall a lot more, still, I am just saying, to please, a) protect more, even from here, still, and, b) try to find another ind. group than these, from here, to exploit on the upside..."
(note: learn, that it is obviously difficult for people WITHIN the industry, to acknowledge any potential "bad stuff", even if true, which is also taught in "PSYCLE sm" PSY-chological patterns, right ?)
* if one is playing shorter-term, with stops, fine....just do not expect huge gains this time....but, after the rise the Oil Svc. issues have had L.T., very unlikely they will regain their top-rated performance forward, possibly for years to come....other groups, currently depressed as Oils were 2-3 years ago, will likely take over, as relatively bigger winners, from here, dig ?
* so, it may even be likely, that, after a normal, possibly decent stage 5/6 bounce, some Oil Svc. issues may again even be puttables.... we shall see.... in the meantime, (since we do not "scenarioize")
I prefer to play the depressed Techs, Healths, Metals, others, here, long....they are more depressed L.T., and if I am correct, have higher upside potential...and maybe, lower risk, with stops....
* but you are to be commended for even knowing about stage 5/6 bounces in the Oil Svc. issues last week....good going....are you long any other depressed ind. groups issues here ? best wishes, |
