* 128 1/2 - 147 7/8 5.2 million shares = Trading* Wow, what a huge buy-in there has been today. Buyers going crazy to get Q! again. Usual volume about 1 million shares.
See, George was right, what goes up goes down. I said we needed to keep both feet firmly planted on the ground and not get overly excited. When trees grow through the sky, they don't do it in a week. They take a year or two. Be patient folks.
Teri, re; "But while a long term bullish story and fundamentals stay in tact, it is foolish IMO to trade in and out of positions." Maybe not. With a long term bullish story, somebody trading in and out will win overall while they are holding the stock. While they are not holding the stock they won't make any headway - their money will just sit there getting a derisory interest rate.
They will win while holding the stock, on average, for the same reason that everyone else holding the stock will win - the fundamentals are good and capital value or dividends will accrue.
But assuming they hold the stock for half the time, they'll only make half the gains of the constant holders. They'll have to buy back in, on average, at a higher price, foregoing the gains which occurred while they were sidelined.
That's for the average person who can't pick tops and bottoms. Of course the person who can pick tops and bottoms will make a LOT of money way over and above the success due to fundamentals.
So, who can pick the tops and bottoms?
If we have 1000 top and bottom pickers who choose buy/sell by flipping a coin, 500 will get it right on the first toss. 250 will get it right on the second toss. 120 will get it right on the third toss. 60 on the fourth toss. 30 on the fifth toss. 15 on the sixth toss. 7 on the seventh toss [the other one retired to spend the profits]. 3 on the eighth toss [another bought a Gulfstream and left town]. 1 will get it right 9 times in a row. They will be prone to think they are an investing genius who knows that what goes up must come down and they can pick the moments when up is really up and down is actually the bottom.
There are a LOT more than 1000 top and bottom pickers. There are maybe a million or 10 million. So there will be heaps of people running around with huge fortunes right now who KNOW how to trade stocks because they have got 100 trades correct in a row.
Unfortunately, there is a little something called trading cost. With Datek and others, the cost is small but the spread on the stock is not. So there is a drain every trade. The trader will tend to get addicted to their intelligence and they will start trading one a week, or even once a day. Heck, why not, 10 times a day. So they rapidly increase their trading costs relative to the amplitude of the ups and downs they are chasing. Once addicted, they are doomed to failure. Unless they really CAN pick a top and bottom by understanding investor psychology [their own and others]. We need to think of Goedel's Self-Referential stuff here. Self-reverential is more apt in this instance.
Anyway, to keep this post VERY brief, George Gotch maybe knows what he's doing. I sure do! So does everyone who is doing fine. We think.
So, picking tops and bottoms is fine for the big amplitude ups and downs, but I doubt the daily ones will be detectable even with triple topped moving inverted average graphs with cyclical dispersion of trading volumes in counterpoint with funds flow. Even if the daily ones are detectable, mostly the trading costs and spreads will eat the trader's profits.
That's my theory anyway.
But looking for the big swings seems a sensible thing. The time to sell is definitely at the top! If a stock has never before been at $150, there is a pretty good chance it will go down again. Unless it doesn't.
Hay, that's odd, now Yahoo! shows the day's range as
130 - 147 7/8
Looks as though there was something dodgy at the bottom. Some phantom trades to move the bottom down?
Meanwhile, the buyers are continuing to go crazy for Q! Will the buying frenzy end soon?
Mqurice
200/2/2000
Dow 16,000 Feb 2002
PS: Sorry for the short post.
Oh yes, this
@917 |
