MG, That Was An Interesting Observation
Now all you have to do is figure out how to take MG.com public. I would look forward to that IPO. I'm not kidding!
I really feel like I: 1) got lucky, or 2) got an associates degree in TA this week. My line in the sand on the OEX worked very well. OEX 600 held like a champ. If you look at mid-December, the same thing happened. OEX closed below its moving average one day, and bounced back above it the next day.
More importantly, the Hit and Run tactic worked extremely well. I'm really beginning to enjoy the basing stocks like ALL and BLS. Those little percentage moves really add up. The S&P is up 1.1% thus far for 1999. I focused on 4 accounts and they are up 6.7% to 15.2%. This is with LLY down from my entry price. I just have a hard time complaining.
I posted this on another thread, but thought it important to share here. Trailing stops can be dangerous. I have a friend that has enjoyed taking control of his investment accounts. He has a job that does not allow him the luxury to constantly monitor the market. So he decided to place very loose trailing stops behind his positions (about 15%) to protect himself (he thought) from a market meltdown.
On Tuesday, he was (with excellent selections) up 8% for 1999. On Wednesday morning, his entire portfolio was stopped out on the open. He ended the day down 2% for the year, and has some tax consequences to face later. He said to me that he got back from a meeting, pulled up his accounts, and wanted to cry.
We discussed the use of trailing stops last summer. His experience was a lesson learned that I am really glad that I did not have to learn personally. Of course, he would have been smelling like a rose if the market had continued South. However, I think we need to ask ourselves if the risk of the situation that occurred in October 1987 and 1997 is worth the risk of what happened to him this week. I do not think that he was alone!
Berney |
