I make a point of avoiding prediction of the market direction, particularly in the near-term which is trading territory based on external forces/economic/sector/company news. that IMHO is folly, except as we all make our choices as to what and when to buy/sell.using hindsight, i could have done better in my brief time trading.
my strategy is to view the market as a microcosm of trends evolving in the world. this reduces market choices to companies which fit with those emerging trends, which i see as:
1. the emergence of a global economy, by necessity enabled via telecom, internet, and supporting technologies (this is one cause of low inflation & interest rates -- expanding frontier);
2. the consolidation of human and company capital to yield an effective growth rate to win a niche in the global marketplace;
3. the emergence of the U.S. as the primary economic backbone of the world economy, partly due to the breakdown of the USSR.(more investment dollars coming into equity market than going out)
4. the desire/imperitave for the 3rd world countries to play catchup.
5. the shortage of technical help worldwide. check how it reflects in business plans (eg: SYNT setting up centers where the talent is rather than trying to recruit people willing to move)
6. the temporary Y2K problem worldwide (watch IBM earnings spiral up from europe this year)
without getting "lectury", i look for well capitalized companies in the telecom and internet & Y2K arena (including backbone technologies that provide a competitive edge) which are aggressively managed, as indicated by acquisitions, mergers, strategic alliances and high net revenue growth with heavy r&d investment (versus profit). some are short term, others longer, none permanent.
How has it worked out? My portfolio when i started trading on January 22nd was 100.449. As of 4/9/98 my portfolio totaled 124,873, for a net gain of 24,424 or 24.4 percent for the 11 week period. the portfolio now has no stocks in it which i owned on 1/22. i have traded over 200 times averaging about 7 days in any one stock. one of my longer term plays is LVLT and RCNC. also try to pick emerging stocks that have relatively little downside risk. made only 800 on YHOO holding it 3 days, and would have made another 600 had i not had to leave for a meeting at noon thursday. did not want to hold over weekend. should have stayed home and missed meeting. always look for a history of positive earnings surprises also, particularly with expensive stocks like YHOO.
sorry i couldn't answer your question, but i don't look at the market direction except for fundamental changes (interest rates, inflation, flows of money in/out by sector and market,etc.) |
