Wow! I am overwhelmed with your response to my survey in
Monday's column. At last count, over 1,200 people had voted. Now, take out my 900 votes, and that still leaves 300 who took the time to respond! I am flattered.
So, if you were reading along, the results were pretty clear. You want: (a) a series on building a methodology and (b) one or two charts per week. Well, that's what you'll get, and here's my plan:
The methodology series will start on Feb. 8. By that time, we will have closed on our new home, moved in, been to a Potomac Valley swim meet (go
!) and shipped the kids off to their new schools. I'd start it earlier, but, well, I have to go to the
I'm not bragging. Truly. Well, OK, I am bragging a little, but I'm really not even a big football fan. No, I have to go -- egads! -- as a spouse! Yes, it is up to me to make party talk with all the other spouses of corporate pooh-bahs, while my wife does whatever it is she does. I know, your heart bleeds for me, but it's OK -- I'll survive!
So, while I'm watching yet another lopsided snoozefest, know that I'll be formulating column numero uno of the "Able" series. Why Able? Because, as I was writing down notes, I came up with some key concepts of a successful methodology: knowable, doable, testable, profitable, livable. Get it? Catchy, huh? OK, I'll settle for "not lame."
My plan is to roll out each installment on a Monday, so I get to you at the first of each week. It should be fun.
As for Wednesdays, that's when I'll do the chart or charts of the week and include miscellaneous discussion topics, invariably centered around how wonderful I am. You know, the normal egocentric stuff.
So, speaking of miscellaneous topics, I mentioned on Monday that the
stuff was passing me by. A variety of folks commented on this, so I'll present both sides with some representative email.
On the one hand...
own these stocks. Making 200 points in a couple days that way would
me as a trader for years. I'd never be satisfied with a small gain; I'd always swing for home runs because it would be so exhilarating.
As for you hating to be behind the people who do own them, consider this: There will
be someone (many people) doing better than you. Every year of Buffett's career, many people have beaten him for that year. The only true competition is this: Who has the best method for consistent long-term results? That's the real goal to shoot for.
Hmmm, M.P.'s letter makes me feel a lot better.
On the other hand, though...
Applying only technical analysis is to equate all stocks. I have read your columns many times and will continue to, but I have to make this comment. Your insistence that only technical analysis matters (i.e., is the only valid determinant of stock direction) is the reason you "wish like crazy" you could make a plan to trade these Nets. At times one has to step back and look at what the market is telling you: The paradigm has shifted, and one has to learn new ways to think about certain tech stocks. Will there be a reckoning? Sure, but that has nothing to do with making a plan.
Examining a kazillion charts and indicators a day, I too am trying to reinterpret technical analysis (TA) for the Nets. I won't go into what I am not certain of yet either, but I am sure that one has to rethink time scales, impulses and breakouts -- that is, what these things mean in the Net market. Lest I sound like a "things are different now" type, I will say no more. However, please consider discussing this in a column since discussion will help all of us trying to adapt to the today's market. I for one would be interested in what other readers use as a Net strategy. TA clearly is not enough.
OK, clearly E.P. advocates an adaptive stance to take advantage of the "paradigm shift."
Who's right? Well, who knows? Here's the thing that matters, something that M.P. hit on: You have to trade with a methodology that fits
. Could I trade the Internet stocks? Sure, I could day trade them, or trade smaller amounts with wider stops and targets, or buy them every time they dip, or -- well, heck -- just buy every Net stock that starts with a vowel!
No, what I meant this past Monday was I didn't have a strategy that fits in with the
rest of my trading style
. I literally spend about 30 minutes a day with my trading. I sleep well at night. I don't worry about a loss here and there. My blood pressure stays low. And, at the end of the year, I net a good dollar.
So, sure I could think up some way to ride
for 50 points in a day. But, I sure couldn't do that with my current laissez-faire approach. And, I darn well wouldn't sleep soundly at night. At the end of the day, I can only conclude it's just not worth it to board the roller coaster. Not if I want to trade steadily for another 30 years.
So, the issue really isn't so much execution as it is knowing yourself, your style and what part trading will be of your overall life.
In short, maybe Gary B. Smith is just not hardwired to trade stocks that move in giant leaps and bounds. Maybe, in fact, he's just a born plodder. But, maybe you're not. Maybe you're
. If so, then be my guest and saddle up.
You see the real key is that good, solid trading starts with knowing yourself. And that folks, is a very short intro to the very first part of my Able series!
OK, one quick chart and one quick quiz. Could it be I completely overlooked a superstar of yesteryear? Yes, I completely blew by good ol'
. A company that used to have the "buzz," but judging from the lack of press it's getting, has all the allure of
. Too bad, because this is one nice chart.
Click to see INTC chart
Finally, I think most of the chart problems have been solved. So, now is a good time to ask what style you prefer, and I'll use the polling thing one more time. Just vote for your fav, and I'll take my guidance from there.
Gary B. Smith is a freelance writer who trades for his own account from his Connecticut home using technical analysis. Under no circumstances does the information in this column represent a recommendation to buy or sell stocks.