Help me to love stocks!

[ebisky]

Allow me to corroborate what Yrs is saying. I work for a hedge fund with people who are far more experienced than I am. Number of times I have heard one iota of technical "analysis" babble spouted: zero.

ebisky, we are trying very hard to be gentle. You clearly believe in the system you follow. However, real world experience of many of us does not bear out what you are talking about. Do yourself a favor and don't get too bound up in momentum trades. It is very easy to get burned.

Ask them Monday and see what they say. Report back to us. Ask them what criteria they use to trade. Ask them if they take TA into consideration with other analysis they do.

Also, TA can't be automated for the reason that it only gives clues as to what will happen. But it is very accurate. It needs someone to decipher WHY the stock is moving in a certain direction. You just can't trade off TA alone. Previous trends help figure out the movement with associated with the TA. Some stocks like to bounce off certain indicators while others bounce off a different one. Using past trends helps to decipher what price levels people buy and sell the stock at. I use TA to find stocks I like, I then do fundamental analysis on the stocks I chose to invest in. I'd say 70% TA 30% FA

-E

 

[cute fuzzy bunny]

Go to the local library, and check out and read "The four pillars of investing" By William Bernstein.

Check back in when you've had a look and let us know what you think.

 

[ebisky]

Go to the local library, and check out and read "The four pillars of investing" By William Bernstein.

Check back in when you've had a look and let us know what you think.

I'll check it out. Has good reviews on the Zon.

-E

 

[REWahoo]

ebisky, I've been resiting this response but your continued defense of your "investment strategy", your youth and investment naivete finally got the best of me.

I've been investing for a little over a year, but don't let my inexperience fool you into thinking I don't know the markets.

I don't think your inexperience has fooled us, but it has obviously fooled you.

I also trade almost every day and surround myself with professionals.

Hmmmm. Day trader?

The strategy I am suggesting here is not one I use.

If you don't have the courage of your own convictions, why should anyone follow your advice?

I am a swing trader, so I don't hold investments for longer than a few days (if that)...

Sounds more like gambling than investing.

... however, I know enough about how the market works to know that investing in industries as a safe investment is a good idea. I've looked at the charts and studied how the ETFs move.

Yet you don't follow the strategy you are advising others to use?

My main point is that if you are investing in index funds, to invest in industries and not the overall market.

That would be chasing hot sectors investing in sector funds, right?

When I have a full time position, I will start actually "investing" my money and it will go into index funds.

So you haven't actually been investing for a little over a year like you said earlier?

Any profits I make off my active investments I will move over into index funds.

If you have this great system for investing in individual stocks, why on earth would you want to put the money into index funds?

Knowing which industries are doing well is not very difficult and would not take a lot of time or research to figure out.

It's easy to figure out what industires are doing well today. But what will do well tomorrow? And the day after that? And the day after that? Not so easy.

I'm just trying to help out.

Maybe so, but good intentioned bad advice is still bad advice. Since you are posting investment advice on this forum I feel obligated to inform those reading it you have little or no actual investment experience.

Do yourself a very big favor, take CFB's advice and read "four pillars". Forget about TA (but not T&A ) Listen to brewer and 3yrs and the others on this forum who have a lot of knowledge and real world investment experience.

Listen, grasshopper. And you will save yourself a chunk of change.

 

[ebisky]

ebisky, I've been resiting this response but your continued defense of your "investment strategy", your youth and investment naivete finally got the best of me.

You can think of my experience in years trading or in # of trades. I've made over 1000 buy/sell trades in the last year. Probably more than a lot of people have over the last 5 - 30 years.

I don't think your inexperience has fooled us, but it has obviously fooled you.

No, I'm up over 250% within 1 year.

Hmmmm. Day trader?

No, I'm a swing trader. Day traders trade multiple times every day and are classified as such under Reg T by the SEC. I'm a momentum trader. I trade on momentum and get out. I only play the upswings.

If you don't have the courage of your own convictions, why should anyone follow your advice?

I don't invest in index funds due to the reasons I have already posted. That, right now, "investing" for the long term is not something I'm very interested in due to not having a full-time job and a great income. I don't classify my swing trading as investing. This is my last semester of college and I'll have a full-time job starting in the Summer.

Sounds more like gambling than investing.

I don't invest blindly. I have a high success rate. This is not gambling.

Yet you don't follow the strategy you are advising others to use?

Again...Read a few answers up.

That would be chasing hot sectors investing in sector funds, right?

Ummmm?

So you haven't actually been investing for a little over a year like you said earlier?

Again, I don't really consider swing trading as investing. I've been TRADING for over a year.

If you have this great system for investing in individual stocks, why on earth would you want to put the money into index funds?

Because eventhough the strategies I use to invest have a high rate of success, there could be times when things just are not going my way. I want to move my $$ over into safer investments such as index funds.


It's easy to figure out what industires are doing well today. But what will do well tomorrow? And the day after that? And the day after that? Not so easy.

Actually, there are industries that have long term trends. Natural Res for example like oil and gas have have been in an uptrend for a while. It isn't like tomorrow things are going to go down hill. People need oil & gas. Also, certain industries do better depending on where we are at the overall market. Bear/Bull etc...

Maybe so, but good intentioned bad advice is still bad advice. Since you are posting investment advice on this forum I feel obligated to inform those reading it you have little or no actual investment
experience.

It is good advice. Again, there needs to be a seperation from what I do, which is swing trading, versus what I'm suggesting others to do which is simply to invest in strong industries using ETFs. No TA needed, only a sense of what is going on in the world.

Do yourself a very big favor, take CFB's advice and read "four pillars". Forget about TA (but not T&A ) Listen to brewer and 3yrs and the others on this forum who have a lot of knowledge and real world investment experience.

I will not forget about TA and will still act on the T&A. I will check into reading the book.


Listen, grasshopper. And you will save yourself a chunk of change.

I appreciate your concern and I understand you are trying to suade me away from the dark side of my actions, yet the strategy I use to trade works for me.

Also, just a side note. I have already mentioned that about 70% of my research into stocks is TA and 30% is in FA. People should never invest blindly into a stock based on a sole indicator. All indicators have to come together to make for a strong trade.

-E

 

[bosco]

and after you've read 4 Pillars, read

"Fooled by Randomness: The hidden Role of Chance in Life and in the Markets" by Nassim Nicholas Taleb.

It almost has your name on it. Actually, it's a great read--I'd recommend it to anyone.

 

[mathjak107]

25 years as an investor has taught me many things.first off i learned that anything that uses historical data is like driving and looking in your rear view mirror.if theres one thing the markets show us, it never reacts the same to the same information.
  trying to time things at best to me is not investing but speculating.anytime we think our system is smarter than the markets themselves thats speculating not investing.be it charts,the moon,skirt hems or the ole crystal ball ,thats speculating..even inside information is speculating...just look at immclone ...............investing means im going along for the ride and will rise and fall with the markets themselves.........when i try to do better i have to hope my system outsmarts the greatest minds and software the world has consistantly

 

[mathjak107]

one other thing i want to add.i think its fabian who uses the moving market average in his newlsletter...well for years he was pushing how his moving average system may miss the 10% at the top and the 10% at the bottom and preseve the 80% in the middle..well that system worked great for years.until it didnt...about 5 or six years ago a quick downturn and rebound left his advise in the dust..subscribers failed to get iback in time and missed the greatest part of the run ups..moving averages are to slow to react to keep up with todays volitale change on a dime markets...needless to say i know no one myself who still gets this news letter...i think it was doug fabian too who also proclaimed he rifined his moving average system over and it was near perfect.he went public showing how he is putting 500,000 or so of his own money in to prove how good it is AND WILL DOUBLE IT IN A YEAR ..well 1 yr later his moving average system brought him a 33% loss vs a 18% gain for the wilshire

 

[poyet]

TA and trading systems can be 100% automated (many good books on the subject including one from Jack Schwager) with variable success.

Have a look @ my 2 blogs:
http://tradingautomation.blogspot.com/
http://cosmosportfolios.blogspot.com/
There's a thread on this FIRE board relating to a 10MUSD reference portfolio.

There are so many ways of making money. Fundamental analysis is one, TA is another and trading automation (many strategies) is a subset. So many ways to trade, so many things to trade !

People should be more open minded stop thinking that what they think they know is gold and that nothing else exists.

For example, there are so many hedge funds types (including well know catastrophes for well know paradigms and brillant brains, e.g. mean reversion) that no one should say, well "I know hedge fund people, this does work and this is rubbish !"

Come on. Let's all stay humble.

 

[unclemick]

Humble sucks! - I am a legend in my own mind and an active investor(since 1966)  - er ah of sort of.

Here's how I keep the male hormones under 'some control' - along with old age/march of time.

I benchmarked my active stock/mutual fund picks with DCA over the years - the last twenty being balanced index. At ER twelve years ago(1993) not counting the duplex - ho hum DCA, balanced index was 80-90% of ER stash. The stocks, RE, timberland, collectible gold and silver coins, active mutual funds were fun, biologically driven and nobody or a book could tell me/prevent me from trying to 'beat the market' once in a while.

As I post - 15% of ER is DRIP/VG broker stocks - albiet pretty much dividend oriented nowadays. For me - it's incurable, male(usually) and biological.

Fisher, Ben Graham and the ancient G. M. Loeb are some authors one 'might' want to read.

Ala Monte Python's quest for the 'Holy Grail' - it only takes one - or was that Ben Graham

Books didn't 'cure' me - the school of hard knocks over twenty years helped bring it under control. But for me - it's incurable.

At least the Norwegian widow gets her dividends.

heh heh heh heh

 

[REWahoo]

TA and trading systems can be 100% automated (many good books on the subject including one from Jack Schwager) with variable success.

Have a look @ my 2 blogs:
http://tradingautomation.blogspot.com/
http://cosmosportfolios.blogspot.com/
There's a thread on this FIRE board relating to a 10MUSD reference portfolio.

There are so many ways of making money. Fundamental analysis is one, TA is another and trading automation (many strategies) is a subset. So many ways to trade, so many things to trade !

People should be more open minded stop thinking that what they think they know is gold and that nothing else exists.

Come on. Let's all stay humble.

And for a small fee, the poster will happily take manage your money and let you experience his system first hand:

"Deployment of the method and technology is very flexible and can be arranged at standard industry rates and conditions, i.e. 2% fees for funds under management, and 20% incentive fees on returns exceeding previous high watermarks. Authors and technology owners are open to any deals with accredited investors in US terms (net worth > 1M$), institutions and broker dealers."

And the latest update on system performance:

Well, the system has been whipsawed and I explain on the blog what happened.
Better days ahead !
Cheers.

Stay humble...

 

[Gone4Good]

No, I'm up over 250% within 1 year.

"Those whom the gods would destroy, they first make proud"

 

[cute fuzzy bunny]

I was up over 300% in 1999.

I'm still using up the capital losses from 2000, although they sure come in handy...

 

[Gone4Good]

I was up over 300% in 1999.

I'm still using up the capital losses from 2000, although they sure come in handy...

I’m sure you just miscalculated the confluence of Fibonacci numbers at a critical support level.   :

 

[cute fuzzy bunny]

I used a far more complex system than that. I thought nasdaq 4000 and PE's in the 300's were nuts. Nasdaq 5000 was even nuttier, so I sold. Ding ding ding...total of 300% gain for that 1 year period. When the nasdaq hit 3000, it looked quite bargainlike. At 2000, a relative steal. At 1200, there didnt appear to be a floor in sight. At 2000 again, it was time to sell and notice that my ass had just been handed to me.

 

[unclemick]

"Those whom the gods would destroy, they first make proud"

Circa 1968 - a ten bagger got me a new rag top Datsun 2000 roadster and a year of Penthouse living.

Since then - smearing the results - about 1% under balanced index benchmark - heh heh heh - duh! - about the cost of active management in those days - Bogle must have saw me coming!

Hope springs eternal - remember - it only takes one (Ben Graham ) or a few (Buffett).

The beat goes on.

 

[brewer12345]

Ask them Monday and see what they say. Report back to us. Ask them what criteria they use to trade. Ask them if they take TA into consideration with other analysis they do.

-E

I don't need to ask since I am part of the investment committee. TA never comes up.

 

[poyet]

And for a small fee, the poster will happily take manage your money and let you experience his system first hand:

And the latest update on system performance:

Stay humble...

1) doubt many people here will invest more than 1M$ in the system, so there is no offer no trolling, just trying to open people's minds that trading automation is an interesting field ;

2) whatever your sarcasms on the system's performance are, it is till 4 times better than the index (NDX) over the same period with the same P2T. As the system is a trend following system and as we've had so little trend this year, it's not that bad indeed. More on past performances over longer periods on the blog. Funny that people are always interested ex-post (when everybody knows it works) and never ex-ante when a small group could take advantage of innovation ;

3) Nobody's compelled to use TA. Some feel they are better off without, fine with them. But there's no need to disconsider what you do not use or do not understand. Nevertheless, I recommend the second part of that book for those interested in designing automated systems: Schwager, Jack D. 1999. "Getting Started In Technical Analysis", John Wiley & sons, 331p.

I'm ER and I take all that (very) easy.

Good luck to all, including those not using TA !

 

[REWahoo]

"...2% fees for funds under management, and 20% incentive fees on returns exceeding previous high watermarks."

Note that the "standard industry rates and conditions" include a 20% bonus (fee) provision for exceeding "previous high watermarks". Conspicuously absent is any reciprocal reduction in fees for underperforming.

Just an observation...

 

[poyet]

You're perfectly right. But this industry apparently finds more than enough customers with those asymetrical conditions ! even though it's been more difficult to raise money these last 18 months or so...

Furthermore we should also define the notion of underperformance which supposes to compare to "something" like an index. And you know the problem, most hedge funds claim to have returns which are not correlated to the market (e.g. making money while the markets dive could even show a negative correlation...) and aim to have positive returns in all (most ?) conditions. It also means that customers could even also be fine making less money than the market during bull runs (underperforming) but still making some while the markets plunge, etc... Therefore, for some strategies, they would trade absolute performance for lower volatility which can make sense for big lumps of money, etc.

My only knowledge / experience is with automated trading using Long / Short strategies as described in the blog. Having spent years developing AI systems for various applications (including critical military and submarines tactical apps that's for Nords), my objective (more than making more money) is to demonstrate the feasability of such trading systems, even though I'm quite sure some large organisations already deploy such kind of systems and keep it confidential given contacts / exchanges I had.

The system has had a great year on the european markets as they were trendy and we also made 4 times the index, but 4 times 20% looks much better. It's also true to say that for global customers, they wish to have funds deployed worldwide with various strategies on all markets, all integrated in a global risk management which is beyond my current reach...

But there are many other strategies. A friend of mine is launching a hedge with the 2-20% conditions mentioned (as unfair) and raised 500mUSD with a mix of "equity long / short", "equity derivatives", "debt / equity relative value" with an opportunistic investment selection, risk / return driven.

And so goes this industry.

 

[Nords]

Having spent years developing AI systems for various applications (including critical military and submarines tactical apps  that's for Nords)

Don't get me started.

I worked at the Naval Research Lab on a corrosion project and I spent three years at Monterey with autonomous underwater vehicle thesis research.  I know how the Navy's side of R&D works. I've even programmed a LISP machine to talk to a Unix box and cough up a 3D graphical simulation. The military's R&D system could work a lot better but at least they don't have to make a profit out of it.

I've also had to live with the "user" side of the system.  Every allied & foreign military computer system designed to find U.S. submarines has had its assets kicked by a LOS ANGELES class sub (or better).  The Australians have an extremely effective active-sonar intercept system, and we quickly learned not to use active sonar around their submarines.  Otherwise the world's ASW game has turned into two blindfolded guys knife-fighting in a phone booth.  The blindfold on the U.S. guy lets in a little more light occasionally but that's about as good as it gets.

I've had to live with two decades of computer-aided tactical "enhancements" coming down the hatch (assuming that the developer realized it'd have to fit through the hatch), and with one exception everything that's come out of the research lab has kicked OUR assets.  If it's not just plain buggy software, it's wimpy hardware that can't handle a little 5g shock or being dropped in a bilge full of hydraulic fluid or sprayed with salt water.  The only thing worse than dealing with the military's BQQ-5 sonar system was the decision to replace it with commercial computers, but at least they didn't require water cooling or catch fire.

The exception to this ugly rule has been PC-IMAT, a sonar search-planning tool that runs on a, uhm, PC, and that uses 3D graphics to aid in optimizing sonar settings.  Those same 3D animations revolutionized sonar technician training and greatly improved the human-factor engineering side of the equation.  20 years of experience, one system that produced the "Cool!" response.  There's gotta be a better way.

I know of at least one serious submerged collision that was directly related to a "magic" AI black box.  I hope that wasn't yours!  It'll make TH very happy to know that was the one time the Navy experimented with Macs... afterward everything reverted to MILSPEC, IBM, HP, or Sun.

 

[cute fuzzy bunny]

It'll make TH very happy to know that was the one time the Navy experimented with Macs... afterward everything reverted to MILSPEC, IBM, HP, or Sun.

It never makes me happy to see that substandard computing products have caused harm.

I can only continue to warn people in hopes they will see the light and make the right decisions.

Spikes, spontaneous fires, frickin laser beams, and now submarines crashing randomly into stuff.

Oh, the humanity...

 

[Nords]

and now submarines crashing randomly into stuff.

Oh, there was nothing random about it. Just selective interpretation of what, in hindsight, proved to be the wrong black-box data massagers.

No deaths, many minor injuries, no life-threatening damage, major body & fender work on both sides. Pretty much typical stuff for the late Cold War, straight out of Blind Man's Bluff.

AFAIK I've never had to take a fire extinguisher to an Intel product. But I've had to restrain many shipmates who wished they could do so...

 

[cute fuzzy bunny]

Oh, there was nothing random about it

So what you're saying is that Apple products, at least those based on motorola architectures, intentionally crash our submarines into stuff? Very interesting. Excuse me a minute while I send a few emails...

AFAIK I've never had to take a fire extinguisher to an Intel product. But I've had to restrain many shipmates who wished they could do so...

They're some HOT products, arent they?

 

[Nords]

So what you're saying is that Apple products, at least those based on motorola architectures, intentionally crash our submarines into stuff?

Yup. Or at least mislead users into believing that a collision risk does not exist, despite other evidence to the contrary.

Can I get paid to say that in a commercial "endorsement"?