To: michael r potter who wrote (2845 ) 5/16/1999 3:40:00 PM From: michael r potter Read Replies (2) | Respond to
-OT- Are the decks stacked against the little guy? No, they are stacked against the big guys. We [small fry] can build or liquidate positions in a keystroke if need be. The big guys have to often build positions or liquidate over days or weeks. That is an eternity in this action/time compressed market. The most inefficient part of the market is the less liquid stocks. Many institutions can not even build positions in them because of their massive position requirements. Even if they could have built a a position in SCAI, SWS, SFE, or FCGI, over days or weeks, it would not represent more than 1% of their portfolio, thus the positive effect would be muted. We can make an attractive situation 10% to 20% of our portfolio in one minute if need be and if correct, it will have an outsized effect on our performance. Information with the internet is now extensive and quickly available, thus minimizing the former advantage that institutions had. We can "follow the big guys tracks" through carefully monitoring of price and volume. If we see big trouble, we can quickly go to high cash or hedge with highly liquid index trusts on the DOW, S&P, or NASDAQ. Institutions can do this too but they have little or no advantage. Fund and pension managers are ever mindful of the immense pressure for quarter to quarter performance and must modify their instincts and better judgement at times in order to obtain their bonus, and there is the ever present threat of dismissal if they under-perform. We have the luxury of answering only to ourself [and our spouse]. We can employ any style that suits us and change styles on a dime if the market dictates. There has never been a better time to be a small investor. We must treat it as a business, not entertainment. All that is needed is discipline, knowledge, and the confidence to act on our beliefs. We must be ruthlessly honest with our mistakes and success, keep an open mind, and constantly try to improve. With that, and the built in advantages that come with being a small investor, we can not only succeed, we can exceed. We are foxes, they are dragons. Dragons are big and powerful, but foxes can win the race through cunning and agility. Go forth and slay the dragons! Mike
