Few things here…If you buy broken, busted stocks like First Marblehead, you better know the freaking story because even if you THINK you know it, YOU DON’T. I have been poking at Starbucks thinking I understand the broken possibilities. It has poked me back with losses.
As I wrote back in March…
One third of all stocks do the BIG ROUND TRIP to ZERO and that is why I don’t buy falling knives anymore. The few that go to zero that you and your conviction are buying all the way down will leave you broken.
Trends end. Stocks that make all-time highs can be at all-time lows shortly thereafter. Remember that when you are feeling cocky and your stock looks invincible. They are not!
What an important time to turn off the television if you own or want to own stocks or even short them.
Idiots are in charge.
They will freak you out at exactly the wrong time.
Every ass in the world is now pulling shit out of their archives about how they predicted this subprime disaster. Everyone was right…ya right! The inmates are running things.
Personally, I would replace the whole shebang with PRICE. You could have been on MARS, returned two months ago and blindly seen the subprime and homebuilder runs were over and still made a fortune. They were already down 50 percent. We are talking two weeks ago.
Screw calling tops and bottoms and being early. Like Eddie said in his reaction – ‘Sometimes smart people do things that aren’t so smart’. Like my idiotic trade in homebuilders a few weeks back. I thought they were overdone. Key word – ‘THOUGHT’. That’s for assholes. I took my loss – thank goodness.
Be late and be right and manage your money. Enter strong trends and don’t stand in front of them. Go with them.
Mike Flowers via comments has asked me to dedicate a post to my Trading Rules.
Here goes:
I have none. I think RULES are pretty absurd. Rules are for the NBA and David Stern. I prefer the word discipline because it is something I can strive for and I don’t hate myself when I am weak. I am weak and have opinions and like to massage my rules.
I think it is better to look at my current portfolio.
I prefer to buy all-time highs. I would say 90 percent of the stocks in my portfolio have been under huge accumulation for months, are heavily owned by institutions and have been growing by leaps and bounds. They are also hated and underowned and overvalued by most definitions. I bought them originally because they broke to all-time highs from sound bases.
I love to buy great brands down 10-25 percent from all-time highs, especially in strong markets (IGT, SBUX, ERTS are recent examples). I define strong markets as those with hundreds of stocks hitting all-time highs. You can look at the widget on my site for those. Right now, we are teeming with all-time highs.
I am a wimp by nature and like buying and selling on the way up.
I will do stupid things often and therefore try to stay away from the screens and the day to day market noise which gets louder every day.
I read just a handful of people on a daily basis – Techmeme, Trader Mike, Maoxian, CrossingWallStreet, FLY, TheStreet.com, James Altucher.
I scan all-time highs daily.
I trade as little as possible.
When in doubt or a slump, I reduce my position size.
.
