GaryB; - Bingo ! ie: -
<< But as of Mar 1, Buy and hold may now win out over trading as the Primary Trend may have reversed...>>
I agree, that is inevitable to a degree sooner, or later. But, I am in a win-win situation by continually taking some profits; as I am ''banking'' real and not paper-profits giving me another piece of now 6 trading ranges/cycles in just 8 months and I have it in my pocket - plus via rotation I am still ''in'' to some degree for the ride.
What makes taking profits on this particular run even more prudent imho - is that it was an incredible 2 day 20%+ crescendo !
...once again; when have we not been met with a torrent of profit taking and the shorts jumping on for the ride down in a scenario like this? The volume of fridays move is a prime indicator of the number of potential profit takers here. The pressure for funds and Institutions not to bank a 20% two day move are immense. The funds have to bank some of that profit - imho, it is inevitable.
As I have been rotating into other subsectors, laggards etc. I am still 75% ''invested'' and will not miss a major sector move entirelly; sure I could get more, or less of a % return doing this - but I will not miss an entire move.
My entire point is this:
Since we have entered this market cycle at the end of August; no one who has just bought & held has made any money. Not a single dime yet.
In what has to be an incredibly frustrating enviroment - anyone who was lucky enough to buy in at the exact bottom of the total market blowoff initially, has watched 30-40-50% profits disappear totally; not just once, but 5 times ! How many times does a dog need to walk up and bite your hand when you try to feed him, untill you learn to eat the damn food yourself ; or to just keep your hand in your pocket (VBG) ?
Fool me once, shame on you ,(hey - we'll be generous here) fool me even twice and shame on you; but fool me 3,4,5, and 6 times - shame on me; because I have to be a slow learner, or a glutton for punishment !
I ''aint'' gettin bit by that Oilpatch dog no mo.... I am a reformed profit taker !
For those who do trade and follow the markets daily; given the volatility of a commodity based sector and also, the somewhat defined trading range of late - how can you go against the odds here ?
5/6 times since September - people here have watched their portfolios rise as much as 50%, only to give up all of their gains entirely ! Lets face reality here as well; 85% of Silicon Investor members are ''not'' buy and hold, or mutual fund types of investors (VBG). There is some degree of trading going on here and most of it is online-self controlled in nature.
So. since we are all virtually traders to some degree here; lets address the choir and the church membership here and lets talk trading !
I would never advocate entirelly liquidating a position in a stock I like longterm and owned at these bottom support price levels, but would advocate taking ''some'' profits/selling into these allready known 6-time resistance levels. The odds are just too good not to ! - sure , ultimately one will sell into the ''move'' that does not retrace and the OSX will blow on through its prior resistance. But, lets examine what happens when we do...
Gary, as you mentioned - it is highly unlikely that the OSX would move in a straight line to OSX 85. But for my example - lets say it does.
So even if I take profits here at OSX 72 and we blow on up to 85ish, if I wait and even re-buy on the inevitable dip from 85ish - say at OSX 78ish (using a trading plan) - I have then banked 75% (say 16 points) of that legs profits and get to ''re-buy'' my stocks at less than 6 points from where I sold - this after a virtual worst case scenario !
I have a 2 to3:1reward to risk ratio in trading this range (16 points banked vs. 6 points lost) still having an existing position to some degree to ride out any unforseen spikes up. I just fail to see the buy & hold benefit in a volatile sector like this present enviroment.
Lets all also face reality here; if we were all really buy and hold investors - would 95% of us even be here ? No, we would read that Oil was at a 20 year low, buy some Energy mutual fund, or a few shares in XYZ Oil Co. and would not be following a damn Oilpatch message board on a regular basis ! - so lets face reality - we are virtually all traders to a degree here ! Even George C is a trader when he moves in & out of the FSESX !
Sure, If I were going to buy Savings & Loans stocks that move in slow, loping moves - no problem. But, with the OSX having 6 moves of nearly 50% in 8 months !?!? This is an adrenalin junkes nirvanna - we all love the action here - admit it ! (VBG).
By position trading, I now have 3-4-5-, or even 6 times my 8- 10-16-20 points in the bank, versus holding ''paper'' profits at say a 16 point gain (using OSX 56 as an avg entry to 72 here as an example).
Sure, no one can hit each and every cycle, perfectly at each top and at each bottom - I certainly am not claiming that, or using that mathematical example. But, given the incredible defined range of late; never has having a trading plan paid off so well. Literally, by buying sub OSX 50-56 and selling post OSX 65-8 to 72 - one has very easilly been able to cherry pick 6 - 15 point ''middles'' of these moves. Even if one gets slightly less than that - just say 10-12 points- that is 6 times 10-12 = 60 to 70 points actually in the bank, and still being ''in play'' here ! - versus - sitting on paper profits of maybe 10-12 points here (unless you bought all your stock at the exact bottom then you would be up 27 points {OSX 45-72 on paper} and looking at a prior index chart showing you that 6 times in the past 8 months all of your paper profits have been wiped out !
I don't know about eveyone else; but I am sleeping well this weekend and my approach to Monday is a win-win.
If we ramp up - I can either take yet more profits, buy laggards, or even sit and wait - building more profits, or wait for an eventual retracement to re-enter.
If we blow off - I buy selected companies on the dips and do this all over again.
I would not feel very good if I didn't sell; and we see the last 2 days profits of 20% blow off over the next week and we settle back at OSX 62-4 once again and build a base there. I would be kicking myself - as the deja - vu nature of seeing that happen for the 6th time would be more than I could take (VBG).
I have my profits in my pocket; they are cash profits - no one can take them away from me; not OPEC, not Crude Oil Traders, not NOESIS (vbg), not Analysts - not anyone !... and not just once but 5 -6 times in this last 8 months someone has managed to take away all of the OSX profits !
I have to stick with whats working now untill proven wrong...anything else - wouldn't be prudent and I am sleeping so much better now knowing that much of the last 2 days 20% move is in the bank (VBG) ! |
