Don't Dismiss the Bulls Just Yet

In response to my column yesterday, a reader remarked that it would be difficult to add anything new to the current body of knowledge on trading. That might be true, although I'd like to think that I could at least repackage some of that knowledge in a novel way! Still, which points would I emphasize in my trading manifesto?

Your equity is inventory, and your sole goal as a trader is to turn a pot of money into an even bigger pot of money by "turning your equity" in the most effective manner you can.





I took every business course imaginable in college and graduate school. I traded using fundamentals for years. My wife was a CEO of a publicly traded corporation. And my conclusion is that fundamentals are meaningless for short-term traders.

Society rewards being "right" as better than being "wrong." Indeed, the desire to be right seems to rank fairly high on Maslow's hierarchy of needs. But the need to be right often works against a trader's best interests. For that reason, most traders will eventually fail.

If you want a good bibliography on trading, start with any books you can read on gambling. Professional poker players, horse bettors and card-counters understand managing money, dealing with emotions and having an edge. That's not true of most financial writers.

Today, the Dow Jones Industrial Average, the Amex Gold Bugs index, or HUI, the T2108 chart, which notes the percentage of NYSE stocks over their 40-day moving average, Pride International (PDE - commentary - Cramer's Take), Nextel (NXTL - commentary - Cramer's Take), Honeywell (HON - commentary - Cramer's Take) and EMC (EMC - commentary - Cramer's Take).

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Charts produced by TC2000, which is a registered trademark of Worden Brothers Inc.

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And that is the final word from the Champs Elysee, where if you get the Outdoor Life Channel, tune in each night for a rebroadcast of that day's Tour de France. You'll find it either interesting or so dull you'll fall asleep immediately. To me, that's a can't-lose proposition!

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Gary B. Smith is a freelance writer who trades for his own account from his Maryland home using technical analysis. At time of publication, he held no positions in any securities mentioned in this column, although holdings can change at any time. Under no circumstances does the information in this column represent a recommendation to buy or sell stocks. Smith writes a daily technical analysis column for RealMoney.com and produces a daily premium product for TheStreet.com called The Chartman's Top Stocks. While he cannot provide investment advice or recommendations, he invites you to send your feedback to Gary B. Smith.