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Strategies & Market Trends : 50% Gains Investing -- Ignore unavailable to you. Want to Upgrade?

To: Ray Rueb who wrote (30927)	8/29/2002 3:45:13 AM
From: Dale Baker	Read Replies (1) \| Respond to of 118717

Wow, I should be flattered you took the trouble to review the whole portfolio. I have no doubt many of the charts are shaky; but you take the trader's perspective while I operate as a multi-month horizon portfolio manager. Options - my positions in most of these were very, very small after I learned last year that making larger bets in options doesn't work for me. You can see in my Updates that the % of the portfolio in options has been 2% or less for a long time. They are small speculative bets, that's all. In a bad-tempered bear market like this, the general market momentum will move most small cap charts. Hence the "cresting waveform" you find in so many charts at the moment. But short-term trends like that aren't enough to convince me to sell a stock if I have it pegged as a long-term value play. Look at a stock like ACGL - there is a compelling and not well-known fundamental story there that I expect to move the stock to $40 once the market firms up. The recent chart is encouraging since it is no longer swishing around with the overall momentum. MAXF and (to a lesser extent) COGI are similar plays for value. The cigar butts TWTC, RSTN and OCPI are mostly cash-on-hand bets that they will pop 50-100% on the first shred of decent news. PGO was my worst blowup of the year; I hold the shares now because they are priced for BK and I think a BK is less likely than an asset sale that will produce a 50-100% pop like the other cigar butts. Believe me, I have learned the past few years that my approach beats the indexes by a mile but won't keep up with the active traders who stay mostly in cash or move to net short if short-term sentiment leans that way. It's just not my style; everyone sticks with what they know best. For me it's stockpicking rather than market-timing. When I look at my top holdings and wonder how they are doing against common benchmarks I get finance.yahoo.com,^gspc,^ixic&a=v&p=s&t=3m&l=on&z=m&q=l, which isn't bad. Thanks for the input at such a wretched hour.

To: Ray Rueb who wrote (30927)	9/3/2002 3:37:16 AM
From: Ray Rueb	Read Replies (1) \| Respond to of 118717

The next week could be telling... Earlier I said: >>Possibly we're at the end of a 5 week dead cat bounce off the late July lows and we're beginning 5 weeks of slide. and >>my charts are SCREAMING SELL and SHORT AND >>Of course, 5 good strong up days and all those negative charts will look much brighter. I give that a 10% chance of happening. Well, upon reviewing the market this weekend, this week is important. I expect us to go down this week, but if the first 3 days are up, I'll flee from most of my short positions and at least balance my position (if not go long). That having been said, I know from experience that the market HATES uncertainty, even more that it dislikes bad news. The Sept 11 anniversary seems to be making some people jittery, and that is yet another bearish sign. You all be careful out there Ray

To: Ray Rueb who wrote (30927)	9/3/2002 5:23:18 PM
From: Ray Rueb	Respond to of 118717

FMT got hit by Moody's... This was EXACTLY the type of thing the chart was predicting. On Thursday Morning (before open) I wrote: >> FMT (4.3) - 5.69 - Cresting waveform after a high floor. SELL and SHORT SHORT SHORT FMT was my strongest recommendation for a short in Dale's portfolio. At 5.69 this was a great short. On Friday the stock crashed after a Moody's downgrade and today closed at 4.48. That's a 21% drop in 3 trading days. News: bigcharts.marketwatch.com{0D3D0C6C-F5C5-4EA7-B8A0-54B0A406D3C7}&newsid=800695381&symb=FMT&sid=2087 Chart: bigcharts.marketwatch.com What tipped me off? The cresting waveform in the MACD said SELL and SHORT: 139.142.147.218 BUT LOOK AT THE PRICE FOR THE PREVIOUS 12 TRADING DAYS!!! That is a FLOOR at a high value; effectively the MM is shorting this stock at a high price anticipating a major drop. THIS IS THE TYPE OF THING THE SEC SHOULD INVESTIGATE AS INSIDER TRADING... Either someone knew something or the MM got real lucky. Do MM's seem like the types of companies that rely on luck? The MM's next action? Either drop more to a lower bottom, or declare this as the bottom. Once at the bottom, hold it down there for 3 days and shake some shares loose from the margin players to lock in some profits and lighten their shorts. Personally, I think they'll drop it lower to around 2.84 and hold it there for 3 days before allowing the open market to have it back as a dead cat bounce (a quick 20% move up from the bottom, where the MM is heavily shorting at the top, followed by another drop to a lower price and more short covering). You all be careful out there Ray