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Strategies & Market Trends : Stock Attack -- A Complete Analysis -- Ignore unavailable to you. Want to Upgrade?

To: donald sew who wrote (28973)	9/4/2000 11:47:43 AM
From: Tai Jin	Read Replies (2) \| Respond to of 42787

When looking for the big call, such strategy also increases risk. Those who take the bigger risks who normally come away with the bigger gains, but if they fail they also take the bigger loss. Don, I can't agree with this. By doing the research and finding an undervalued stock which is in an explosive earnings growth phase with the big money flowing into it, you can do very well investing in it and with low risk. it is not something that you decide overnight. It takes weeks and months to do the research and study how the stock is trading. The example I give is MERX this year. Your QCOM example failed because it was a momentum stock, it had nothing to do with real value or real earnings growth. So it depends on how you make that big call. If it is based on momentum then it is likely to be short lived and you'll get burned. But if you base it on extensive research and a true understanding of how a stock is trading and why then it can be highly rewarding with low risk. It's what I call "becoming one with a stock." Only then can you know its full potential. I don't expect to find such a stock every day or month, but I don't have to. If I find such a stock just once a year I wouldn't have to do much else. ...tai

To: donald sew who wrote (28973)	9/4/2000 12:12:47 PM
From: Casaubon	Read Replies (1) \| Respond to of 42787

Well, what O'Niel is really saying is this: before a company puts in the really big move it telegraphs it by putting in a certain pattern (the cup and handle). The pattern doesn't just occur as a result of technicals; the pattern occurs as a result of fundamentals. When the fundamentals are set up properly, demand for the stock will be such that a cup and handle pattern will emerge (because of human nature hope, fear, greed, supply and demand). It is not "proper" to "invest" in a stock until the pattern emerges because the risk is too high. It is not until this pattern emerges that a high probabilty trade can be undertaken, with a downside risk well defined by the pattern and the upside potential only limited by the actual resultant growth rate of the company in the months ahead. Firstly I have to ask, is he saying that the majority is looking for the big call or is he saying that investing should be based on the BIG CALL? So, I would say O'Niel is defining the proper point to invest when one can anticipate an upcoming big move with a well defined loss action point on the trade. This results in large moves to the upside over relatively short periods of time or, if wrong, small well defined losses over a short period of time. Even if you are only correctly identifying the pattern 50% of the time the outsized gains should easily overcome the limited losses on the trade. He also defines market action points which suggest when to lock in profits. So, his style is not buy and hold forever, rather buy when large gains can be anticipated (pattern recognition is necessary) and sell when the market action warrants it. He also espouses the virtues of averaging up (not down) and holding onto winners longer, while selling losers quicker. If the purchases were made at the proper time the 8% loss limit should keep one in the trade the magority of the time (but that involves really identifying the proper "pivot point" of the trade very accurately).