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Technology Stocks : Dell Technologies Inc. -- Ignore unavailable to you. Want to Upgrade?

To: jimleon who wrote (44546)	5/22/1998 11:54:00 PM
From: Jock Hutchinson	Read Replies (2) \| Respond to of 176387

Watch out for gc. He has a PhD, and he is a money manager. He also likes to brag about the size of his....

To: jimleon who wrote (44546)	5/22/1998 11:56:00 PM
From: Chuzzlewit	Respond to of 176387

Jim, I will be happy to hold the money. But, to be fair, all trades must be backed up with trade slips. I will calculate the return using an IRR calculation. Money received as the result of a sale will accrue interest at rate of 4% per annum. I will publish the results monthly. TTFN, CTC PS, I just think a second gauntlet has been thrown!

To: jimleon who wrote (44546)	5/23/1998 12:29:00 AM
From: Bilow	Read Replies (2) \| Respond to of 176387

Cool challenge. I imagine that the chart readers will have a big argument for the chance of taking the other side of the bet. By the way, your terms give an almost incredible advantage to the other guy. First of all, the restriction that 25 trades occur can easily be performed without a loss. Recently I bought and sold a stock three times consecutively in a single minute, each time buying at 11 5/8 and then selling at 11 11/16. Of the three times I held the stock, none was for as long as 10 seconds, and once I only held it for 2 seconds. So I could easily get 25 trades done in the first couple of weeks, at prices that would leave me likely at a profit. I'm not sure how to interpret "Compare TA rate of return versus my long buy and hold strategy". If by this you mean the historical return of DELL, then we must annualize our returns, and my ability to make a 1/16th profit in a couple of minutes will translate into an incredible return. Even making the spread once per hour would be a 200% annualized gain or so, which I believe is faster than DELL has appreciated over the long term, (but I haven't checked.) As far as this being possible, you are probably aware that DELL is the most traded stock by SOES bandits, and at least some of them make money doing this. On the other hand, if I am to interpret "rate of return" to mean that the comparison will be between what DELL does over a year and what the TA expert account does over a year, then a slightly different tactic will beat you with extremely high probability: First buy the stock. This is the initial trade, and you will alternate between being long and being flat. After making a profit and having 25 trades, you simply leave the position alone (long) for the rest of the year. That this will be highly likely to succeed is simply due to the mathematics of random walks. -- Carl P.S. I don't consider myself a "TA expert", but just looking at the DELL chart, I would expect it to continue dropping. The market maxim that applies is "The trend is your friend." But I wouldn't get short now. If I was short I would cover on the first up day.

To: jimleon who wrote (44546)	5/23/1998 10:46:00 AM
From: Geoff Nunn	Read Replies (1) \| Respond to of 176387

Jim, thanks for posing this challenge to the TAer's. While I'm certainly no fan of TA, I sort of agree with Bilow that the bet wouldn't be difficult for someone to win -- as you have framed it. 1. You seem to be staking a lot on the fact that the TAer will pay higher commission costs compared to buy and hold. Commission costs of course are a function of size of trade, and spread. Dell often trades with a 1/16 spread. This means that on 25 in and outs, the TAer will pay 24/16 more than B&H, which gives him only a 1.76% disadvantage (assuming Dell is priced at $85). As for the brokerage cost, that can be a trivial factor if a trade is large and done over the internet 2. Your only other advantage is that the TAer will be out of Dell for periods of time, and only earning interest. The TAer will have the losing position if, as is more likely than not, Dell appreciates during the yr. In the spirit of Bilow's remarks, this disadvantage can be almost completely nullified by the TAer, since he controls how long he wants to be either in or out of the market during the period. 3. Conspicuously absent in your challenge is any mention of taxes. To make it a fair comparison, I would suggest we assume the TAer pays S-T cap gains taxes on any gains while the B&H pays L-T cap gains. Let's assume the TAer is in the .396 tax bracket. Even this is not entirely fair to the B&Her, who will normally postpone taxes for periods much longer than one yr., Nevertheless, it becomes a more realistic comparison to make some provision for taxes. In fact, in an era of declining commissions, it is taxes that generate by far the greatest handicap for TAer. Thanks again for your post. Geoff