Autumn,
I found your post interesting and a bit hard to understand in terms of just what exactly is it's point (although this thread is not especially renowned for same, IMO).
Wouldn't the "ideal" moneymaking system be to ride ZITL up and then when the
"back" is broken out of the stock as it probably will following it's predecessors
THEN short it and ride it down? Am I missing something?
Obviously, if one knows the past it's more than a little bit facile to say that a stock can be traded long while it's going up and short while its going down. I suppose if I had this prescience I'd be a billionaire. To put it more plainly, who would know that ZITL would double from p/e 110 to 220 in such a short time? IMO, it could have crashed at any time.
Your suggestion of waiting for the trend to reverse is more constructive also that is not foolproof either.
There are a lot of trading styles. Many people view shorting as a short term instrument only. However, it can also be viewed in the longer term. I've never been good at timing and prefer to have time rather than the trend on my side. This is particularly true of overvalued companies having what I'd label structural weaknesses. Such weaknesses can be strong competition, no barriers to entry, narrow product lines and so on. For ZITL, the question of generating a sustainable revenue stream three years hence is a big weakness, IMO.
But sure Autumn, with readily available hindsight there may have been more money made on the long side than is possible now on the short side of ZITL. So what? There is still strong potential for a short side profit.
My approach to ZITL is not as aggressive as Mondoman's. At this point I'm holding on to my short. Mondoman has been averaging up. He is confident that the stock will drop significantly and is willing and able to wait for that to happen. While I can't speak for him I think he's treating it as a if he was buying a stock to hold long term.
What I really don't understand, Autumn, are your remarks about responsibility.
..well, if it is not this reason than I would have to find you, to my humble
opinion as irresponsible in not capitalizing on the way up and THEN capitalizing on
the way down.
I would have to be l00% responsible to ask myself what I
COULD have made with my time/energy/capital during that period that I DIDN'T
make and ask myself how often I am willing to get into this position a year and truly
WHY am I doing this?
Perhaps you can clarify this concept for me. Are you saying that since on any trading day we can look at the close and identify stocks that have made large moves (ZITL would have worked on several occasions), we ought to hold ourselves "irresponsible" because we did not commit our entire net worth to that trade. Are you saying it's "irresponsible" to make a sub optimum trade? That it is irresponsible to take a position that takes a year or two to become profitable? Even more to the point is to ask what the concept of responsibility has at all to do with investing. Since everyone has to deal with the results of their trades, isn't that an adequate assignment of responsibility? Moreover, the responsibility issue is a slippery slope--whether an individual has the cash resources to persue various investment strategies; what kinds of risk they assume; if they are compulsive gamblers in the guise of traders are really personal issues that I'd leave to that individual to resolve.
One last item--can you reconsile these two statements for me:
Of course I have nothing
to prove or ego/or anything
Perhaps you are not interested in maximizing opportunity and your goal is
much more mellow and less intense.
You wouldn't be making a judgement here would you?
Regards,
Lyle |
