Internet..The internet sector has been kind to many traders this past year but I don't really think the party will last forever. If all I did was trade the internet stocks than what am I doing researching, checking news data, scanning, charting, backtesting 2-3 hours a day.
It's like the Joseph's dream with the 7 good rich years then the 7 lean years. When the Egyptians lived those 7 good years they were complacent hedonists, not thinking anything would change. Joseph gathered up rations and prepared for the 7 lean years. While everyone was starving, Joseph had food.
Morale: The 7 good years translates in today's volatile market to the 7 good days, (7 good minutes sometimes!).
If you don't prepare for the 7 bad days, you'll lose it all. I'd love to spend my trading life making 10 points on MSPG, 7 points on CMGI and 11 points on LCOS and ELNK. But the reality is that you should always be prepared with a 'basket' of alternative trades.
The basket should include:
a) fundamentally sound stocks that are beaten down (i.e. FINL,RXSD, WFMI,TAXI,GMGC etc )
b) fundamentally sound stocks that have broken through resistance (or bouncing off support) and are making new highs (WCOM, DELL, EMC,GCI,WPI etc)
c) Stocks with strong short term technical rank whose fundamentals lagging, but great growth potential(i.e. AMFM, QWST,LOR,COMM, ELNK)
d) Stocks that have news of a pending profitable alliance, new product, new contract (BVSN,CATP,LHSPF, etc)
e) Stocks that have beaten expections and will be good bets for at least the next 3 months (TKLC, ERTS, QLGC, QCOM, VTSS, GPS,ANN, WMT,CATP)
So, although I'd love to live the dream of trading just those great hi-flyers, the reality is a little more 'down to earth'.....
and last of all you gotta love what you do. |
