[ale] OT: Stock Traders?

[ChangingLINKS.com]

1. On Sunday 27 April 2003 07:05 am, CB Genrich wrote:
> ChangingLINKS.com wrote:
> >It never seemed logical for someone to hold a stock while the price dips
> > from $100 to $50 on faith that the price will bounce back. Methinks one
> > should sell at $75 and buy it after the stock rebounds.
>
> I missed the part where you found out in advance that it was going down
> to $50, instead of $75.  Can you go over that part again?

Yeah. I had mentioned it in an email a few days ago. The word of the day is 
"stop."  When you buy a stock there is no sure-fire way to know if it is 
going up or down. Soooo what do we do to keep from sustaining big losses? 
That's right boys and girls. Sell stops. Use them.

When you drive off to work each day, you are betting that you won't have an 
accident. Still, you have insurance (partly do to the law) on the car so that 
IF you have an accident, there is a safety net. Use sell stops when trading 
OR you might as well plan on having an accident. Sell stops (and stops) are 
insurance against the price dropping drastically AND offers modest protection 
against the emotions you may feel when the price is sliding. I am hoping that 
the concept is clear now.

2. > Because, if it started back up at $75, then you just sold at rock
> bottom.
Yes. This is a risk that you take. Sometimes you miss making money but the 
first rule of investing is . . . . capital preservation. The "buy and hold" 
strategy may influence some people end up holding nothing but hope.

3. >Luckily you have that technique for knowing in advance what that low will 
be.

We all have the technique available. What is the "LOW?" How do we know it in 
advance? Well, that is up to the individual. Once you decide what a 
comfortable low is (ahead of time),  you place a stop in so that if the price 
of the stock falls lower (or rises higher) than your stop a transaction is 
executed to sell (upticks apply, but so does that offswitch they used on 
9-11-01 and spring of 2000 and . . .). To sickness(in latin): If the stock 
rises close to the to the stop, you CAN move the stops up to set a new range.

4. > By the way, I wonder why you wouldn't sell at $100, then buy back at
> $50?  
Because in my example 50 was the low. The sell stop "should" been set at $75 
(per the investors comfort level and circumstances). I simply illustrated how 
to CUT LOSSES and not "buy and hold." There is no justification for holding 
from $100 to $50. (Emotions don't preserve capital very well.)

5. On the surface, it would seem to be the more profitable approach.  >Does 
>  your  special way of knowing the minimum in advance not work for  knowing 
>  the maximum?  Because if it did, we could make a bundle.

My technique warrants that I do not need to know the maximum or low. And, we 
can all make a bundle . . . . read on:

6.  Lastly, do you have a technique for knowing which stocks will rise and
> fall the fastest in the future?
Yes. You probably didn't think about that question before you asked it.

> It's just an optimization, but knowing that would make it possible to make
>  money faster, which is what we want.

Imagine if you could get ahead even if the prices of the stocks that you owned 
fell. Imagine if you could make money if the stock market rose as well - 
using the same technique. No, it is not "buy and hold" that is a technique 
for the people that are sold on the idea by the "pump and dump" crowd.

To wit:
* Determine the range of two assets or equities that have semi-volitile price 
inversions and calculate the buy, hold, and sell on a daily basis. Done. 
(For illustration: Research the price ratio of qcom vs. microsoft over the 
last few years. Or, research the price ratio between physical gold and 
platinum since 1970). 

I will be commissioning a software application/web site to make this process 
easier. It will have a database that holds the daily prices for the two 
investments and will be able to determine the cost of the transaction (the 
hardest part) and easily spit out the price of action. The values can be used 
with Ameritrade of a broker to "guarantee execution." Now, unless you really 
think about it  (move away from conventional investment strategy) you won't 
see the point of all that work.

> Thanks for the "buy low, sell high tip".  I hadn't heard that one.

You're welcome. If you want more information, we can work out a fee scedule 
for my consultations. While I normally give away information free, the tone 
of your email implies that you are a "buy and hold" loser (like I described 
in the earlier email) - and gives me the idea that it will take *effort* to 
help you see that you can own stocks without first pledging to "buy and 
hold." Of course my assumtions could be wrong but "for you I make a special 
price."

I appreciate your remarks. It helped me see that the software that I needed is 
easy enough that I could almost code it myself. I had not thought of using a 
web page to do it. 

***Anyone wanting to help me figure out a way to automatically input the data, 
or help code the page (not too much work should be fun) reach me offlist.

Drew
>
> -CB-
>
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-- 
Wishing you Happiness, Joy and Laughter,
Drew Brown
http://www.ChangingLINKS.com
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