Message Font: Serif | Sans-Serif
 
UnThreaded | Threaded | Whole Thread (19) | Ignore Thread Prev | Next
Author: Calabogie Big gold star, 5000 posts Old School Fool Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: of 36686  
Subject: Re: Trading for a living (re Saratoga thread) Date: 7/23/2001 3:22 PM
Post New | Post Reply | Reply Later | Create Poll . Report this Post | Recommend it!
Recommendations: 9

I currently do not have a LT portfolio but it is my plan to set aside money someday so I cannot blow it. Whether it is in a money market fund or a conservative LT port will be something I think about another day. At the present time, as I attempt the transition, I cannot have a LT port. In addition, if I were to lose all the money I am trading currently my present career will sustain me.

Regardless of age, I believe everyone should be putting some aside once a month into something fairly safe. That's not to say, "Stick it in a bank and gain 0.1% interest." or whatever it is today. It can go into funds (I don't use them but some of them have very good track records but you can't use stops in a fund) or individual stocks or at the least some type of bank plan where the interest is higher than a normal savings account. That aside, it's good to hear that you have a separate career to fall back on should you have any problems trading, and believe me I hope you don't! I wish everyone the best in their trading and love to see others do well.


Right, from this statement I concluded you average down, and I made a generalized statement at Saratoga not expecting the STT board to come there. In that post it simply wasn't necessary for me provide more details as to whether or not you do it ST or LT to make my point to the Saratoga members.

From what I read it seemed your point was that people using the STT board were not trading correctly and needed to be educated. You were attempting to do so but for some reason we stubbornly refused to listen to your sage advice. Even the leader of the STT board was averaging down! Yes, that sounds sarcastic but it's not meant that way. Read it though and then think about how it looked to members of this board when you posted on the Saratoga board. You didn't put what I posted in context, which gave members of the Saratoga board an incorrect impression and you made it sound as though the members of this board were in big trouble simply because some of them disagreed with you.

I'm not trying to lecture or preach even though I know I sound that way quite often. I apologize if any of this post disturbs you. It's not meant to. I'm just typing out my thoughts and how I preceived your posts to both this board and the Saratoga board.

If you add to a position that is at a loss it is averaging down no matter what timeframe is used. As I understand it, accumulation is accomplished by institutions who can create a markup or have a good idea a markup will occur (though they make mistakes too), and profit when the stock rises, breaks out, with the expected public participation. Unless you have that ability, it is averaging down, and you are hoping to have a profit someday in the LT port.

Averaging down is accumulating is adding to your position, etc. etc... They all amount to the same thing and it is a useful tool when addressing LT (investment) issues. For many it's the best way to buy stocks since many people can't afford to just up and buy 1000 shares of CSCO or whatever the flavor of the day is (is it CSCO today or EMC? :)). Buying a small number of shares each month (usually a specific amount of money as opposed to number of shares) makes a lot of sense if someone uses their head and does the proper research in order to make an informed decision. That person is averaging down or up everytime they buy unless the stock just happens to be at their original buy price.

Yes, this is a Short-Term Trading board but I believe very strongly that traders should also have LT ports. It's part of my ST trading strategy and during the last 9 years I have taken a percentage of my ST gains over that year and put them into one of the LT ports (usually the DRiP port) which I won't touch. I didn't do it before then because I hadn't thought of it yet. LOL

Do you have a LT port that is down that you continue to add to?

Specific stocks in any of my LT ports may at some point be under my buy price and at that point, yes, I continue to add to that position. At this time there are only two in any of the three ports (my wifes, our joint DRiP, and mine) that is underwater and they are CSCO and LENS. I've been in and out of CSCO a number of times over the last 3 years and have made a very nice profit on it but at the current time my original buy price for this purchase was 26+ in my personal LT port (my wife doesn't like the company and does not own the stock.) I have continued to buy shares at 23, 20, and 16. I will continue to add to my position as it moves up as well, buying a specific amount each month.

As for LENS, it is currently more than 50% below my original buy price and I will not add to that position. Averaging down is not something that I do automatically unless it's in the DRiP port and LENS does not fit into the category of stocks I would average down on. That may be a mistake given that LENS may come out of this slump and make a pretty big move in the next 3-5 years (given their market share that's not unlikely) but I'm not convinced so I won't put more into it.

Having said all of that, remember that I still use trailing-stops in my LT ports. I don't use stop-losses in my LT ports as a rule (occasionally I'll do that but only for a speculative LT play) but once the stock price rises substantially above my buy price, I will put in trailing stops on at least half of the shares if not all. That's why I've been in and out of CSCO even though I consider it mostly a LT stock for me. I've been in as long as 11 months and as short as 2 months. In my mind they were LT investments even though they could be classed as ST trades since almost all of them lasted less than a year but it's my way of looking at a stock.

Have I lost money on LT stocks? Yep. It happens and it's something that has to be considered just like losses in trading must be considered.

Anyway, this post has gotten way too long. The only thing I'm really trying to say is that you should be open to more than just one trading style and be tolerant of others whose style may differ from yours. They may be very successful doing things their way but you'll never know unless you allow yourself to look at other possibilities.

Sorry for the length. I'm a windbag as anyone here will tell you. ;)
Post New | Post Reply | Reply Later | Create Poll . Report this Post | Recommend it!
Print the post  
UnThreaded | Threaded | Whole Thread (19) | Ignore Thread Prev | Next

Announcements

Post of the Day:
Value Hounds

Ubiquiti Analysis
What was Your Dumbest Investment?
Share it with us -- and learn from others' stories of flubs.
When Life Gives You Lemons
We all have had hardships and made poor decisions. The important thing is how we respond and grow. Read the story of a Fool who started from nothing, and looks to gain everything.
Community Home
Speak Your Mind, Start Your Blog, Rate Your Stocks

Community Team Fools - who are those TMF's?
Contact Us
Contact Customer Service and other Fool departments here.
Work for Fools?
Winner of the Washingtonian great places to work, and "#1 Media Company to Work For" (BusinessInsider 2011)! Have access to all of TMF's online and email products for FREE, and be paid for your contributions to TMF! Click the link and start your Fool career.
Advertisement