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Strategies & Market Trends : Market Gems-Trading Strong Earnings Growth and Momentum -- Ignore unavailable to you. Want to Upgrade?

To: Lane Hall-Witt who wrote (2461)	1/20/2001 9:57:06 AM
From: lee kramer	Read Replies (1) \| Respond to of 6445

DAYTRADING: The Highs and the Woes 1/20/01 They wanted to interview us. A national publication decided that their readers would enjoy an article about daytrading. Somehow they got wind of us. A hatchet job no doubt: poking fun and sarcasm at a couple of guys who traded in a whacky way. Losers. I wasn't worried. Dortmunder was another matter. "Dortmunder, we're gonna be interviewed!" I told the little guy. "Indeed" he said. "Aren't you excited?" I asked. "Forgive me for not jumping up and down with joy" he replied. "Mmm." The interviewer arrived with proper credentials, a tape-recorder and a camera. His name was Dan. I introduced myself. "Where's your partner?" Dan asked. "Oh, he's upstairs, eagerly awaiting." We went upstairs. "Dan, say hello to Dortmunder." After I revived Dan with smelling salts, and a few sharp slaps about the face he sputtered, "But he's a monkey! Your trading partner is a monkey!" "No Dan, he's not a monkey. He's a chimp with an IQ of 187." It didn't help matters when Dortmunder, clad in his three-piece Saville-Row suit said in his clipped British accent, "I quite detest members of the fourth estate." "He talks!" said Dan and once more crumbled to the floor. Again I revived the poor fellow. This was not going well. "Shall we begin?" I asked. Dan nodded. His color was not good, kinda battleship gray. I thought he was about to swoon. But he fumbled with his tape-recorder and began. A professional. Dan: "How long have you been daytraders?" Lee: "Several years." Dan: "Can you describe a typical day?" Lee: Sure. We arise at 4:00 a.m. I put on the tea, Dortmunder prepares the raspberry scones. From 4:30 to 7:00 we look at charts, select a handful that appear promising. Most of our work is done before the market opens at 9:30. Dan: Can you tell me exactly what you do? Do you call your broker and place trades? Dortmunder snorted. DORTY: We eschew brokers. We shun brokerage firms. DAN: Why is that? DORTY: Brokers charge outrageous commissions. Brokers constantly pitch one stock after another. Brokers take forever to report back with a fill. Do you know how much can be lost while waiting for a fill? Tempis fugit, tempis fugit. DAN: So what do you do? DORTY: We trade on-line, via computer. With a click we can buy, sell or sell short. We get our fill within seven seconds. Commissions are less than $10. DAN: You sell short? Isn’t that un-American? DORTY: Mmm. DAN: So how did you do last year? DORTY: Rather well. Primarily, my good fellow, by selling short. DAN: How many trades do you make in a typical day? DORTY: Five or ten. DAN: Sounds like gambling to me. DORTY: It is gambling, though we refer to it as informed speculation. DAN: So you fellows are speculators? DORTY: Of course. DAN: But most people are investors. And from what I understand, they do very well. DORTY: Not last year. Investors saw their Telephone stock decline 70%. Sun Microsystems got cut in half, DELL, slipped a mere 75%. DAN: So you profited by selling short? DORTY: Indeed. When appropriate it must needs be done. DAN: What’s the most important thing you do? It must be choosing the right stock to trade? DORTY: Absolutely not. The first thing that is done after putting on a trade is to enter a stop-loss order. DAN: I’m sure our readers would like to know what a stop-loss order is. DORTY: Quite. Simply, it limits loss if the trade goes awry. :DAN: Let’s say one of my readers has $300,000. What stock should he buy? DORTY: He shouldn’t buy a stock. That’s a wild gamble. He’d best buy T-Bills, T-Notes or the long term 30-year bond. At 6% money doubles in twelve years. In the interim, $300,00 throws off $18,000 each year in interest. DAN: What about bank CD’s? DORTY: After a decade of loose lending I’d not touch bank paper. DAN: But the analysts and experts on CNBC often recommend stocks to buy. DORTY: ( laughing) We do not listen to the experts and analysts on that entertainment station. AMAZON plummeted from 115 to 13 and CNBC reported that the stock was downgraded. CNBC caters to investors. They bring in fund-managers to answer questions from callers. They tell Solly in Secaucus that this or that stock sure looks good. But they fail to mention that they own a few million shares and are getting clobbered as it drops. And CNBC loves to pass along rumors which investors tend to buy, buy, buy. And of course, with the exception of James Cramer once in a while, they offer nothing to traders. DAN: Is daytrading stressful? It was time for me to interrupt. LEE: Of course it’s stressful. I have a weekly appointment every Saturday with Doc Kronkite, a former Barney-Fife stand in, who specializes in the woes of daytraders. He’s a specialist. Wrote a best seller, “The Truss: Friend or Foe.” You should buy it and read it. A bargain at only $59.95.” DAN: Well I see my time is up. I have to interview Maria Bartiromo. She’s always on the Floor; that’s the floor of the N. Y Stock Exchange. LEE: Golly, I didn’t know. Say hello to Maria for me. Lee Kramer