A reader emailed me the other day with a simple question: Would I ever encourage my kids to trade? Katherine and Diana are only 9 and 11, so the question is probably premature, but it does eventually beg an answer. Therefore, I'll devote Wednesday's column to a thorough discussion of this topic, but until then, I'd be interested in your views. In short, should my kids (or yours, for that matter) start trading? And if so, at what age? I'd welcome your views, and only ask that you keep your answers succinct! Along with my column, I'll publish the best of those submitted.
Other thoughts, questions, commentary? You know where I live:
email@example.com. And, if you can bear to part with it, your full name is most appreciated.
Oh yeah, and one other thing: Long Course Season starts today, and my kids are back in the pool! (My kids RULE during long course, where only the strong survive!) (P.S. This is total BS, but it sounds good...)
Listening to the Muse
Gary, I have seen a lot of volatility in Micromuse (MUSE) lately, as it has broken through its year high. Do you see MUSE going further upward or maintaining its current price level? Thanks. -- Adam Mancino
Gary, Love your column, man. Can you share your thoughts on WebTrends (WEBT) ? I feel this company has huge potential for the short and long term by checking the companies it is in bed with. What's your take on the short term, please? -- Ken M.
Reeling In the Profits
Hi Gary, I'm relatively new to
, but already I love your column. Cramer who? I've been following Secure Computing (SCUR) for quite some time, and when it crashed recently on bad earnings news, I dived in the waters to do some bottom-fishing. Not sure how to read the chart on this one. Would you mind taking a cast at this sucker and let me know when I should reel in my profits? Any long-term guesses on the stock, or are the waters too murky? Thanks! -- Joe Andert
Time for the Bear
Gary, I've been trading for only a short time during this bull market. I have never been through a bear market (yet). I was wondering if your methodology and strategy changes during a bear market. Do the concepts of TA apply the same way? Do you tend to short more? I've been practicing short-selling on paper with little success so I'm afraid that when the market turns bearish, my only option would be to get out and wait for the next bull market. I guess my real question is: How do you make money during a bear market? -- Richard Ng
Since I've never lived through a bear market (and I mean the early '70s variety), I can only guess how I'd do. And my guess would be just fine. If you read back through many of my columns, you know that my methodology essentially follows the trend of the market ... whichever way it's heading. Up is good; down is good. Sideways is bad!
As an example, from last July to October, when the market was consistently heading down, I did very well, with the majority of my trades coming on the short side. Therefore, I have to assume that if a trend like that continued for more than a few months, I'd continue to do well again, primarily by playing the short side. It's for this reason alone I periodically make it a point to educate readers on the benefits of shorting.
In my view, TA works in all types of markets. It's up to you as a trader, though, to be versatile enough to use the many tools at your disposal.
No Amateur Hour
Gary, I love your column; you make technical analysis easy for us common folk to understand. I belong to an investment club in which the members do not understand the value of technical analysis or the use of stop limits. We have been burned more times in this bull market than I like to think. Stocks that we have using our amateur stops have remained below our selling price, but the members have decided against using stops to protect the account. Two awesome results of that decision are Safeskin (SFSK) and Network Associates (NETA) . NETA is something that looks like it has major resistance at 38 to 40. Can you comment on this and Safeskin if you have time? Many thanks. -- Allyn Hummel
Where's Xircom Headed?
Hey Gary, Big changes in Xircom (XIRC) since you looked at it Jan. 17. Did the insiders' selloff spook the market? Looks like relatively heavier volume the last couple of days. Time to buy? -- Leona Robinson
Let the Battle Begin
Dear Gary, I know very little about the technical aspects of charting, but I do appreciate your work and read your columns. I would be very interested in a head-to-head challenge between you and Cramer for three months to see who wins. After all, we are in a pragmatic game of numbers -- there is no doubt who is the winner at the end of the day. -- Mike Krystowiak
Cramer vs. me? Why, I'd crush the man!! I'm faster, smarter, stronger and let's face it -- better looking! Also, I went to
, while he probably applied, got rejected and had to settle for his second choice ...
! I mean, really, do you think it'd even be a contest?
No, all kidding aside, a contest like that wouldn't be fair to either party. The main reason has to do with size. With his size hedge fund, he generally trades in fairly large lot sizes. And given that, he then has to focus on trading liquid, primarily large-cap, stocks. Otherwise, he runs the risk of either moving the stock himself, or not being able to get in and out of stocks conveniently.
As an example, today (April 7) I shorted
American Management Systems
. As of 1:30 p.m., it had still only traded 250K shares. Liquid enough for me to get in and out of, but if you tried to move, say 20K shares, like JJC does, a lot more difficult feat.
The bottom line is that our universes are different, with mine, by definition, much larger. Because of his volume, he's confined to a limited number of picks out of the 10,000 stocks available. And because of that, his returns might suffer a bit. Of course, this is sort of like the
problem: I'd rather have 40% returns off a very large chunk of money than 80% returns off my piddling amount of equity!
Shooting the Moon
How can I resist that subtle turn of words?! See the chart.
NETG vs. CMGI
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 had no positions in the stocks mentioned, 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 also writes Technician's Take, which appears every Monday, and Charted Territory, which runs Wednesdays. While he cannot provide investment advice or recommendations, he welcomes your feedback at