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Strategies & Market Trends : The Art of Investing -- Ignore unavailable to you. Want to Upgrade?

To: Sun Tzu who wrote (323)	11/24/1998 9:44:00 PM
From: Michael Sphar	Respond to of 10713

Risk is a tool. Risk is a personal issue. In order to deal with risk, one must know one's self. Some people are risk adverse, some are risk prone. I'll give you some of Mamis's words on risk, speaking about stocks that have tanked. He wrote much of this after the 73/74 debacle and before the beginning of the great bull starting in 82: "The single best time to buy a stock—you can put this in your will for your grandchildren to rely on—is when, given bad news, the stock refuses to go down any more." "Bottoming information has to be an outpouring of bad news that seems as if it is never going to end." " ‘Time risk' is always present for those who are over anxious to bottom fish." "At the bottom, there is maximum negative, and no positive, information, but the price risk is minimal." Speaking of a bottom head and shoulders pattern: "The emotional content of a right-shoulder bottom is of hatred and aversion; the technical content is one of low volume and disinterest. The price risk—because selling is exhausted—has been taken out of the stock, even though we have total information risk." "At the moment of maximum information risk the price risk is minimal." "The more information that becomes available the greater the price risk because the stock has already risen." "Thus at the point of maximum positive information we also have maximum price risk." "By waiting to find out what the next ‘something' literally might be, one assumes an additional price risk!" "In bear markets, the price you get today is likely to be better than the price you'll get on the next rally." "It never can be easy because the rule of the market is that you have to act before you know enough. Because it is a process, there is no one moment or single point, at which one can make an obvious ‘sure' decision." "But we must remember that there are times when the market, or life itself, is incoherent, unclear, and/or conflicting; times when it isn't us, it's it." "Setting ourselves free from the quest for information, oddly enough, is what reduces risk even as it appears from the freedom itself that risk is being scarily increased."