I'm not gonna bore you with you more discussions on earnings reports from
, because I'm sure you've had your fill by now.
Nor will I bore you about the dollar/yen relationship, or today's other relevant trading information:
So, stepping away from our usual trading focus, I'll conduct some self-analysis and hopefully we'll all learn some trading/investing lessons from it.
and I meet several times a day to review our portfolio as well as to analyze the emotional aspects of the business, to reduce the constant pounding of greed and fear. (A little insight: JJC isn't the only hypercompetitive, neurotic guy whose name is on the door; those tendencies just manifest themselves a little differently in his partner.) In his absence, I'm hoping that this article can help me identify and correct some of our poor decision-making.
I'm obsessed with Dell today, pulling my hair out. Dell should make a big splash on my profit-and-loss today, positively. VERY positively. We have a nice-sized Dell position, pretty big for our standards -- but not big enough, given the good call we'd made going into Dell's report. My industry and analyst checks indicated that Dell was gonna have a really good quarter. Furthermore, my understanding of the market indicated that this stock would fly if it delivered the numbers.
So it's fair to ask: "Why weren't you bigger in Dell?" The answer is that we correctly played the market conservatively for several weeks. We had significantly pared back our exposure weeks ago. As JJC more than adequately documented, we cut our shorts back and added longs at the short-term bottom. But after weeks of psychological pounding from a correcting market, it is really hard to increase your exposure dramatically.
We were maintaining a decent-sized Dell position, but it was obviously too small. We should've cut something else we didn't like as much instead. What I'm trying to say is that a good trader will sell the bad, keep the good. In our zeal to pare back exposure, we sold more good than we should've.
To prevent this from happening, JJC and I often rank our stocks. Dell was clearly a 1, meaning buy weakness aggressively, don't sell. In a market in which the inflation reports were giving you a respite, I should have been loading up the boat. I wasn't. I bought some yesterday, and bought some 40 calls but had to rely on manic buying of Dell on
once the numbers were released. More rational observers would argue that the nice-sized buys of Dell with a $42.27 average would make many ecstatic. I would argue that that I should have done better.
That's what it's like for a trader. Even a good play feels like it should've been better. Kind of like betting 10 to win on a horse, and knowing that with a little gumption you could've bet 20. Should've bet 20.
Jeff Berkowitz is a partner in hedge fund Cramer Berkowitz with James J. Cramer, co-founder of TheStreet.com. At time of publication, the fund was long Dell and Yahoo!. The fund often buys and sells securities that are the subject of his columns, both before and after the columns are published, and the positions that the fund takes may change at any time. Under no circumstances does the information in this column represent a recommendation to buy or sell stocks. Berkowitz's writings provide insights into the dynamics of money management and are not a solicitation for transactions. While he cannot provide investment advice or recommendations, he invites you to comment on his column at