To: Don Pueblo who wrote (2052 ) 11/30/1999 7:32:00 AM From: Mama Bear Read Replies (1) | Respond to
TLC, I can state 100% truthfully that anyone who followed Tony's advice to the letter did well in ADSP, although it was indeed a heart stopping experience. There were a few folks who chose to ignore his advice on allocation, and as a result were wiped out. "What would you say to someone who followed your advice on Wednesday, had 40 grand in their account, and shorted 7,000 shares at a average of 11 bucks and then woke up on Friday to see it trading at 22 and going higher and covered immediately? What would be your advice to that person? "fact is that anyone who follows Tony's advice would NEVER overallocate like that. Anyone who does overallocate like that is NOT following Tony's advice. The fact is that Tony recommends splitting your trading port into 5 (aggressive) to 10 pieces. Let's assume the aggressive 5 piece portfolio to find out how much danger someone who actually followed Tony's advice was in. First of all, the call Wednesday was for 12 to 13, not 11, and was a 20% call. A 20% call means that you put 20% of one of the 5 pieces, or 4% of the port into that position. Let's assume a 20k allocation. 20% is $4000, or 333 shares. The next call on ADSP was 20% at 20, in the Friday premarket. A lot of folks don't have premarket trading, and Tony cancelled the call when it became apparent to him that the stock would run. But I'm going for worst case here, so we'll put another $4000 at 20, or 200 shares. Total short 533 shares averaging 15. The next call is 25% at 30. That's 166 shares for a total of 699, average is now 21.66. The final call was "as much as you want" at 56. Since there's 35% left, I'm going to go with that, and I'm only going to give an execution price of 50 to the final piece. That's 140 more shares. Total position is 839 shares, average is 23.81. The most someone would have been down who actually followed Tony's advice would have been down $26,867, at the peak. That peak also didn't last very long, and by the close the deficit was down to just over $11k. While being down 26.87% is no walk in the park, the fact is that ADSP was an extremely unusual situation, by several orders of magnitude. The stock has no business in the double digits, much less running into the 50s. But the plain fact is, no one would be wiped out by a hit of 26.87%. Hurtin' for certain, but not anywhere near wiped out. It is completely unfair to point to those who chose to ignore Tony's advice as victims of that same advice. Actually, it's a mutually exclusive concept.
