# It doesn't matter that you're wrong, only how long you stay wrong!!



## tech/a (16 June 2011)

Nick Radge was the first I know to coin the phrase.
But I've seen it time and again over 17 yrs.
People get it so so right only to eventually get it so so wrong.

PEN
Is the stock of discussion currently.
Some got it very right from 3.6 c to 16c from memory only to see it fall a whopping 66% when there was clear signals that this stock had run it's course.
Now as CL has pointed out you need a 130% price rise just to be square again.

BUT
Some have added more on the way down convinced that cheap today will be cheap tomorrow. So far it hasn't been and isn't showing any reason for it to be the case in the near future.
Frankly I think with every stock there is ample time for those interested enough to educate themselves in the basic skills of recognizing Supply and Demand through Volume and Range Analysis,to get on board any worthwhile positive move.
I managed 30% myself in a couple of days on the very same stock.
So far our longterm investors are 100% up in a few years.Personally I'll take the 30 % in 2 days anytime.

BOGGO
Has pointed out opportunity cost whick is a biggy.
There could and should be many 30 % s in a few days in THIS MARKET.

There are times to hold and times to fold and this Market isn't indicating longterm long trending anytime soon.


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## mr. jeff (16 June 2011)

What a great thread name.  

Are you trying to make this a confession booth?

I confess that I have become a bad loser this year after such a dream run last year and this thread should have been created in February. A good winner is a good loser. CUT LOSERS FAST. I have become lazy - I have watched 60% gains in 2 weeks dissappear into losses, and countless 30% gains go down as well.

I have bought stocks because they are "promising" and "very cheap". Writing this makes me laugh in my own face. Promising and cheap?!  I have no income except trading and I am using my account on promises and cheapness! 

I CAN NOT MAKE MONEY FROM A GOOD STORY! The only people that make money from good stories are the PR people who write them and add carefully cropped glossy pictures.

A reminder to others here who contribute - buy stocks that are winners, don't get stuck in a serious downtrend that makes you feel locked in -take it off the table quickly and move on to other opportunities.


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## Wysiwyg (16 June 2011)

How long is long? Most trades are "wrong" from the outset (spread) unless one gets a flying start. "Cut losses short" is purely a judgement thing and only hard stop losses will do this every time. Unfortunately or fortunately, the "cut losses short" scenario leaves one in two positions afterwards...

1) the trade continues down (the exit was good)
2) the trade swings up after exit (the exit was too soon - additional brokerage costs from more trading)

I think the trading time frame for each trader is what determines "how long they stay wrong". This is quite varied. I don't mind being wrong because I can't pick the turning points exactly and hindsight aint my teacher.


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## Boggo (16 June 2011)

mr. jeff said:


> I confess that I have become a bad loser this year after such a dream run last year and this thread should have been created in February. A good winner is a good loser. CUT LOSERS FAST. I have become lazy - I have watched 60% gains in 2 weeks dissappear into losses, and countless 30% gains go down as well.




Its a different market now mr jeff, it requires more of a hunter instinct.
You have identified that, the problem is do you put in more time and effort or just go to cash and stand on the sidelines.
Getting into any stock is no different really, its the knowing when to get out is the bit everyone gets wrong especially at the moment.




Wysiwyg said:


> 1) the trade continues down (the exit was good)
> 2) the trade swings up after exit (the exit was too soon - additional brokerage costs from more trading)




Don't look back at it. If it turned against you and you got out at the capital protection point that you determined when you made the decision to get in then you have followed the plan and you have only lost what you were willing to risk.
There is only one exit.

Are you planning your exit strategy after it has turned against you Wysiwyg ?


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## matty77 (16 June 2011)

Whats more important, knowing when to sell? or knowing when to buy?

I think knowing when to sell is the hardest thing to get right but certainly the most important.


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## Wysiwyg (16 June 2011)

Boggo said:


> Are you planning your exit strategy after it has turned against you ?



Thanks Boggo. 
Mainly trading company value and potential value so time is secondary *until these values* *decline or are realised*. The daily fluctuations and market 'sentiment' I can ignore.


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## Country Lad (16 June 2011)

tech/a said:


> CL must have had his 80th birthday by now !




Thanks Tech, I think.       No, not quite, you are about a decade and a half out.

mr jeff, I doubt Tech intended this as a confessional, just a continuation of the point Boggo and I were making about the folly of holding stocks which are in obvious downtrend.  

Using the PEN example, it has been quite obviously in downtrend since 22 Feb.  A response to this may be that it is easily seen in hindsight, but regardless of how we look at it, it was patently obvious that from 11 March downward was the only direction.  
As I said in the other thread, I have been in this shares trading/investment game for about 30 years and over time have associated with a large number of very experienced traders/investors.  Not one of us will hold a share in obvious downtrend unless it offers a significant return on the investment through dividends.  Not one of us would hold a speculative share in downtrend because in our minds there is simply no valid reason to do so.

*The Downside of Holding on to Speculative Shares*

There is always a reason a share falls in value whether you are aware of that reason or not.  Once out of favour, a share may well take a long time to come back in favour if ever.

A value drop of 10% means that it will need a 11% increase to break even, which isn’t so bad.  However, a 20% drop needs a 25% rise, a 50% drop needs a 100% and in the case of PEN now, it needs about a 140% increase.  Many of the specs will not recover at all.  

Holding on therefore ties up funds, possibly forever, which could be used to buy other profitable stocks.  The justification in people’s mind in holding is that it has become a long term investment.  This is rationalising a mistake, no spekky can be considered an investment.

In most cases the spekky will not recover and at some point it will become obvious that it is a loser and it is sold at a much greater loss than would be the case when the downtrend was first identified.

*Why Hold on to a Loser*

It should be made clear that a speculative share in downtrend is a loser.  It should no longer be seen as an opportunity, it is losing value so it is a loser.

Over the years I have been involved in trading groups where many in the group were new to trading or inexperienced.  I have also run trading information sessions for new or inexperienced traders for my broker.

There is absolutely no doubt that the experienced did not hold shares in downtrend.  The inexperienced had 5 main reasons for not selling:

1.  Selling at a loss was very difficult, selling at a profit was easy;
2.  Selling would be admitting a mistake
3.  Fell in love with the company/share and it can do no wrong even when the price is plummeting
4.  People who appeared more experienced were saying to hold on – it will come back
5.  Some members on a forum were posting positive information

*Not Holding on to a Loser*

The reasons for not holding on to losers given by the experienced traders

1.  Opportunity to use the funds to buy a winner
2.  Once out of favour, more often than not, it is likely the market sentiment to that share will remain negative for quite some time
3.  If it is felt it is a good company there will be an opportunity to buy back more for the same outlay

For people who have difficulty in selling at a loss, I am reminded of a saying by one of the most successful traders I know

_“If it feels like a difficult decision, it is most likely the correct one”._

Some people may have noticed that I have been a member of this forum since 2005 but my first post was a couple of months ago.  Like many other forums, there are quite a few vocal members here giving bad advice and covertly ramping particular shares by posting all sort of links and quotes.  I just can’t be bothered arguing so I don’t generally visit forums.  I tend to stick with our  trading groups of mainly experienced traders without the nonsense. 

Cheers
Country Lad


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## Country Lad (16 June 2011)

matty77 said:


> Whats more important, knowing when to sell? or knowing when to buy?
> 
> I think knowing when to sell is the hardest thing to get right but certainly the most important.




Absolutely.


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## Country Lad (16 June 2011)

Wysiwyg said:


> Thanks Boggo. ............and market 'sentiment' I can ignore.




I never ignore market sentiment, but then it depends on how you define market sentiment.  The daily ups and downs of the market and of individual shares are not necessarily relevant.  It is how the market reacts to news broadly, how the shares of various sectors are moving, the reaction to outside influences and many other factors.

Cheers
Country Lad


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## Boggo (16 June 2011)

Country Lad, your post (#7) above has to be a candidate for the post of the year.

No agenda, no ramping, the facts just how they are, it's as simple as that.

Well done CL

Boggo


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## Julia (16 June 2011)

Boggo said:


> Country Lad, your post (#7) above has to be a candidate for the post of the year.
> 
> No agenda, no ramping, the facts just how they are, it's as simple as that.
> 
> ...



I agree.  Great post, CL.

As is your own comment, Boggo:



> Don't look back at it. If it turned against you and you got out at the capital protection point that you determined when you made the decision to get in then you have followed the plan and you have only lost what you were willing to risk.
> There is only one exit.


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## So_Cynical (16 June 2011)

On the flip side "It doesn't matter that you're wrong, only how long you stay wrong!!" only holds true if the SP slide continues or doesn't rally within your investment time frame...if the stock bottoms and starts running up then selling at the worst possible time would be a mistake for an investor with a longer term view.

For example

I have an open position in APN and recently took a small average down and was encouraged by a recent change in substantial holder announcement by Orbis Group...Orbis now holds over 13% of APN and have been holding for about the same length of time as i have (coincidence) and have continued to buy and lift there stake in APN in spite of the stock experiencing a substantial down trend.

http://www.asx.com.au/asxpdf/20110615/pdf/41z7f54nzfb3p3.pdf

Orbis are very experienced contrarian, value investors with a longer term view and over 2 billion under management...these guys have been very successful following their strategy and continue to buy APN despite the 12 months+ down trend....so perhaps "It doesn't matter that you're wrong, only how long you stay wrong!!" only really applies if you are wrong within your investment time frame.

Personally i don't look at charts covering time frames less than 6 months...and for the record wouldn't touch PEN with a barge pole at any price.
~


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## Julia (16 June 2011)

Just a general comment in regard to protecting capital.

When the GFC happened the media was filled with 'experts' all saying "don't worry, it will all be just fine.  Markets always come back"   etc etc.
This almost entirely from parties with a clear stake in people holding their "Growth" managed funds, on the basis that if they advised clients to go to cash, their own income streams would be forfeited.

So many naive investors followed what they considered - reasonably enough - to be expert advice and lost a bundle.   

I wonder how many of these investors have since decided to educate themselves in order not to be ever again in such a vulnerable position.  My guess is, very few.


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## Boggo (16 June 2011)

So_Cynical said:


> On the flip side "It doesn't matter that you're wrong, only how long you stay wrong!!" *only holds true if the SP slide continues* or doesn't rally within your investment time frame...if the stock bottoms and starts running up then selling at the worst possible time would be a mistake for an investor with a longer term view.




That statement after the one below on 19th May !!
Have you sold out of PTM or are you still holding, it closed on $4.03 today.



So_Cynical said:


> I brought into PTM today at $4.73 pretty much a nine month low, factoring the dividend forward i reckon a gross yield of around 5.5% is quite probable...Platinum is a star fund manager in an industry dominated by mediocrity and ultra conservatism.


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## Boggo (16 June 2011)

Julia said:


> I wonder how many of these investors have since decided to educate themselves in order not to be ever again in such a vulnerable position.  My guess is, very few.




From the numerous chats you see around the old campfire on here they are unlikely to become extinct Julia.
The more the market falls the more of them appear and the more defensive they get, tough little critters


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## bathuu (16 June 2011)

Wysiwyg said:


> 1) the trade continues down (the exit was good)
> 2) the trade swings up after exit (the exit was too soon - additional brokerage costs from more trading)




I would never regret for losing more opportunity for profits than incurring more losses. Safety comes first to greed


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## bathuu (16 June 2011)

Country Lad said:


> Thanks Tech, I think.       No, not quite, you are about a decade and a half out.
> 
> mr jeff, I doubt Tech intended this as a confessional, just a continuation of the point Boggo and I were making about the folly of holding stocks which are in obvious downtrend.
> 
> ...




*The one of very few best posts I have ever read in this forum as a beginner for the share market.*


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## So_Cynical (16 June 2011)

> Quote Originally Posted by So_Cynical (1st-August-2010)
> I brought into PTM today at $4.73 pretty much a nine month low, factoring the dividend forward i reckon a gross yield of around 5.5% is quite probable...Platinum is a star fund manager in an industry dominated by mediocrity and ultra conservatism.






Boggo said:


> That statement after the one below on 19th May !!
> Have you sold out of PTM or are you still holding, it closed on $4.03 today.




Still holding and have taken a small average down @ 4.39 and will continue to hold, fundamentally little has changed for PTM and i may well take another small average down if it slips under $4....i did have opportunity's to exit my original PTM position with around 15% profit (from memory) however decided to "let my winners run" turned out to be a bad move.

One of my favourite sayings is "don't buy a stock unless your prepared to buy more if the trade goes against you" this has been a very successful strategy for me over the last 4 years and i will continue to peruse it with vigour.

---------------

Just for the record a quick look at Stator tells me that since i first entered my PTM trade (1st-August-2010) i have closed 6 older trades for 4 winners, opened 18 new positions and have closed 14 of them as winning trades and continue to hold the other 4 losers...a winning strategy is more than just 1 trade.


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## Boggo (17 June 2011)

So_Cynical said:


> One of my favourite sayings is "don't buy a stock unless your prepared to buy more if the trade goes against you" this has been a very successful strategy for me over the last 4 years and i will continue to peruse it with vigour.




OK, cannot get my head around that concept though


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## Country Lad (17 June 2011)

One of my pet hates is the term _"averaging down"_ which I consider as a nice way to say _"I stuffed up by not selling and I am now compounding the mistake_".

That should bring a few out of the woodwork.

Cheers
Country Lad


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## cynic (17 June 2011)

Country Lad said:


> One of my pet hates is the term _"averaging down"_ which I consider as a nice way to say _"I stuffed up by not selling and I am now compounding the mistake_".
> 
> That should bring a few out of the woodwork.
> 
> ...




Yes I quite agree.

I much prefer to "average up" whenever possible.


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## tech/a (17 June 2011)

Cynical

You have an 80 % win rate
67 trades in 4 yrs
And a ,67 expectancy

I think that if it starts to hurt ( the loss) then you KNOW your wrong .

Uderstanding how ro maximize profit in a move is a must for every trader.
Honing the ability to understand where a stock is in the life of it's current move is a must.
I and BOGGO use Elliot for this.

It would be extremely helpful to those " averinging down" to understand wether the move they are buying is nearing completion or worth waiting longer.
APN for example showed no reason to believe it would turn from a down to an up move--- technically.


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## Wysiwyg (17 June 2011)

So_Cynical said:


> One of my favourite sayings is "don't buy a stock unless your prepared to buy more if the trade goes against you" this has been a very successful strategy for me over the last 4 years and i will continue to peruse it with vigour.



Yes I have a similar philosophy. That being ... I can stay irrational longer than the market can remain solvent. :


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## basilio (17 June 2011)

This is an interesting and valuable thread that has me in many minds...

I'm not sure for example how one splits the line between a  "speculative" and a more solid stock. I think it can be easily blurred and this factor alone can have an effect on ones intention and  market reactions.

As I see it  much of the money in the market is now being made on short term plays. Buying and selling on IPO's . stories on oil strikes, metal shows , prospective medical breakthroughs. We see a sharp rise big volumes - then steady falls that in most cases takes stocks to even lower levels. I suppose the trick is to somehow get in on these plays make a dollar and get out.

But overlying this should be the original intent of the market - as a place to raise capital for genuine investment and for people to invest in well run companies with a view to longer term profits. The long view.

So what happens when one sees promising companies that are pushed up and down by day to day speculation or simply ignored because they are are too  small to attract the attention of  traditional investment funds ?

To illustrate the point think about three particular examples.

Linc Energy started with a bang 5 years ago and reached $5 plus in late 2008 on the basis of its coal to oil aspirations. After the GFC it crashed and one of the critical turning points was it's failure to sell large coal fields that had been developed. 

By June 2010 it's SP was down to around a $1 ( and only worth $500m) - yet there was yet another leak that the coal sale which would be worth at least $1b was now "certain".  The sale did come through and despite the addition of  effectively $2b in value to the company the SP price only moved up to around $1.80.  Was LNC now a "proper" company with  excellent reserves and technology, well cashed up and on the  move ? 

A year later it sits at $3.00 with yet another imminent $500 m plus coal sale as well as  a string of new resource acquisitions that appear certain to return quick early cashflow. Is it now a "proper" company ?

AUT is another interesting example. It's focus was oil shales. In 2010 it was a small "spec" explorer at around 20c. A couple of ASF members were/are relentless exponents of it's potential as a profitable oil producer as it's drilling program became established. 

It's now sitting at $3 plus and is producing more and more oil . The market has now given it's support to the share as a serious producer. (mind you some analysts now think it is overvalued in relation to similar prospects)

Example 3.  HOG. This is another oil explorer/producer. It actually made a very good find in Nov 2010 and started production in Feb 2011. It is cash flow positive and is undertaking further drills in the same field to probably triple it's cash flow. And yet this share languishes at almost the same price as when it actually struck oil in Nov 2010.!  All the buyers since then are in the red  !  Should they sell because it is a "losing trade " or  make a longer term investment decison that says "this company is making a lot of money now and should only only get better in a few months. The market has got it wrong for the moment." Is this  "falling in love with a stock " or making a considered longer term judgment ?


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## IB12 (17 June 2011)

> It doesn't matter that you're wrong, only how long you stay wrong!!




Rubbish. 

The correct phrase should be;

"It's not whether you're right or wrong that's important, but how much money you make when you're right and how much you lose when you're wrong."


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## Wysiwyg (17 June 2011)

basilio said:


> But overlying this should be the original intent of the market - as a place to raise capital for genuine investment and for people to invest in well run companies with a view to longer term profits. The long view.



About 80% of the companies are speculative investments with a high number of companies run by irresponsible (other peoples money) directors, aren't they?


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## basilio (17 June 2011)

Wysiwyg said:


> About 80% of the companies are speculative investments with a high number of companies run by irresponsible (other peoples money) directors, aren't they?




I fear your right... which makes it much harder to find a relatively genuine company and far more temptation to say 'sod it all'  and just play short term games  trading in and out of  creative spec plays.

Whats also worth considering is that a genuine company proposal would probably be thoughtful, well constructed and cautious in its long term outloook. But It would be fairly likely to be succesful.

But what is the chance pf such a "boring" company getting noticed against a suite of other flashy companies that promise the earth have very creative figures in their spiel and thus attract  keen interest and initiually high share prices.

On thinking about it I believe there is a very real perversity in the market as it currently works. .


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## tech/a (17 June 2011)

IB12 said:


> Rubbish.
> 
> The correct phrase should be;
> 
> "It's not whether you're right or wrong that's important, but how much money you make when you're right and how much you lose when you're wrong."




Let me take a stab at this---Your in "Product Developement" .


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## Assasin (17 June 2011)

Hi folks,

Can I say that in my 12 months at ASF that this thread over the past couple of days has been a real eye opener and a fantastic refresher course.
I thank all contributers and hope you keep the enthusiam to continue this topic.
Heck, even Tech/A was being serious for a while.:bananasmi
Appreciate it.
Cheers:bier:


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## So_Cynical (17 June 2011)

IB12 said:


> Rubbish.
> 
> The correct phrase should be;
> 
> "It's not whether you're right or wrong that's important, but how much money you make when you're right and how much you lose when you're wrong."




You got my vote.


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## tech/a (18 June 2011)

So_Cynical said:


> You got my vote.




Would someone please educate me in making a better profit from holding a stock when you know your wrong----- longer.

There is a difference to wrong and giving back some profit in a move.
Well perhaps someone would are to educate me on this a well.

The amended statement is in my not so humble opinion----- RUBBISH.
It attempts to quantify bad trading decisions as good trading decisions if profit is on the otherside.

In the example of PEN some traders who boast a 100 %  + profit after a decimation of their open profit---- could have and in my view should have taken the opportunity to double their holding with wise trading.

If you look back on the thread you'll notice I called a sell if 12 c traded a few days BEFORE decimation--- it was a clear trading signal.

Today I suggested buying a double bottom with a close stop.

Now correct me where wrong----??
relative to the " amended statement "
How much you have lost and how much you have profited from the two approaches is pretty clear-----

Staying wrong too long sucks!
Depletes profit and kills opportunity

So the statement is RUBBISH
I await an enlightening reply.


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## mr. jeff (18 June 2011)

I like what Livermore says about entries and exits - you plan a trade and your exit, then if you enter and it does not act the way you had expected for the trade then you exit with no harm done. You were wrong. 
But if you stay against your plan, and the price eventually does go your way, you have still failed as you are not making money from your strategy. You might take money, but not correctly. 

(I know people will say this is still a win, but not the same as trading your plan and winning).


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## tothemax6 (18 June 2011)

tech/a said:


> Nick Radge was the first I know to coin the phrase.
> But I've seen it time and again over 17 yrs.
> People get it so so right only to eventually get it so so wrong.
> 
> ...



What is this _*nonsense*_.

It takes some serious quackery to have a trading policy prefixed with 'it doesn't matter if you're wrong'. The _only_ thing that matters is that, in aggregate, you are *right*.
And as for PEN, well, I have to admit tech/a I have yet to see such a level of persistent lunacy from any 'poster' on the internet. Will you or will you not accept the basic observation of reality, that PEN dived because it was a uranium exploration stock, and the Fukushima incident occurred? 
What the hell is this 'it had run its course' *nonsense*?
*Logic:* PEN dived because of the Fukushima incident, you CANNOT predict nuclear power-station damaging tsunamis, therefore YOU DID NOT PREDICT THE PEN DIVE.
You either agree with this statement, or you admit to insanity.


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## mazzatelli (18 June 2011)

tothemax6 said:


> The _only_ thing that matters is that, in aggregate, you are *right*.




Tell that to people who lost money shorting otm gamma in options. 90% win rate - they must be killing it :

@tech
Only cases where I see this happening is when trading certain dealer/OTC products e.g. no touch options with 7 day duration. The way to deal with these is hedge into the barrier, rather than offset and get out quick. Slippage is huge.


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## tech/a (18 June 2011)

Max
PEN had fallen from 16 to 12 c a drop of 25 % prior to the tsunami
It had obviously run it's course.
Further it bounced from 6 c to 12 c after the Tsunami and is now back in the 6 s again
More evidence that it had run it's course.

While not " predicting a dive in PEN anyone following the analysis would have been on the right side a day before the Tsunami--- and out-- avoiding a 50% decimation to their holding.
I don't care what causes falls or rises only being IN FRONT of them. In other words the right side.
Not always possible but often probable.


Back to the beach


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## tothemax6 (18 June 2011)

tech/a said:


> Max
> PEN had fallen from 16 to 12 c a drop of 25 % prior to the tsunami
> It had obviously run it's course.
> Further it bounced from 6 c to 12 c after the Tsunami and is now back in the 6 s again
> More evidence that it had run it's course.



'Run its course' is as objective as 'it smells right'. You have no idea what would have happened had the Fukushima incident not occurred. You are guessing. It would most likely have continued upward in valuation given the continued good announcements. It is back down in the 6s because of continued investor uncertainty, both of the prospects of equity in general (ASX200 continues downward), and the prospects of nuclear power given the reaction of Germany.

I might add to 'it only matters if in aggregate you are *right*', that 'it only matters if you know _why_ you were right, and were not guessing like a game of roulette'.


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## skc (18 June 2011)

Can someone define wrong? There is no doubt that the TA guys will say price is the only measure. But with PEN and assuming people bought in based on fundamentals, I would define wrong as:

1. Not selling at >14c, when even the most optimistic analysts (with high uranium price and unrealistically low $A) have price targets around that level.

2. Not selling after Fukashima, especially when they were given a perfect dead cat bounce to 10-11c for a graceful exit.

3. Not admitting that the uranium prospect has changed for the worse, and that the overall market will apply a higher discount rate to any uranium stock.

4. Keep buying more with utter disregard to position sizing and risk management.

So yes I agree that "It doesn't matter that you're wrong, only how long you stay wrong". But let's keep an open mind that people enter stocks for different reasons and so the definition of wrong is also different.

P.S. It doesn't matter that you're on holiday, only how long you stay away from ASF.


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## Ves (18 June 2011)

So_Cynical said:


> On the flip side "It doesn't matter that you're wrong, only how long you stay wrong!!" only holds true if the SP slide continues or doesn't rally within your investment time frame...if the stock bottoms and starts running up then selling at the worst possible time would be a mistake for an investor with a longer term view.
> 
> For example
> 
> ...



Just a beginner question - but is this what is referred to as 'discretionary' trading? Or is it closer to "investing" than "trading"?


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## Country Lad (18 June 2011)

tech/a said:


> Max
> PEN had fallen from 16 to 12 c a drop of 25 % prior to the tsunami
> It had obviously run it's course.
> 
> While not " predicting a dive in PEN anyone following the analysis would have been on the right side a day before the Tsunami--- and out-- avoiding a 50% decimation to their holding.




More likely they should have been out a little earlier than the day before.  I was in PDN and all the signs were there for a while that the uranium cycle may have topped with uranium prices dropping, stockpiles increasing, and share prices in uranium stocks dropping.

The charts of PDN and other uranium stocks were giving sell signals and an objective and detached assessment would have been to exit uranium stocks nearly all of which had started a downtrend.  

I sold PDN a week before the explosion not because I was particularly clever but because all information and the chart said it should be sold.  I would have expected that PEN holders would similarly monitor their investment and sold – obviously not.  

Cheers
Country Lad


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## barney (18 June 2011)

Interesting thread ............

Rather than comment on the many "informative" posts individually ...... 

From my observation, one comment which may be a parallel, and perhaps even more relevant to the original thread title ..........

*Which is the more detrimental to ones trading account ...... Fear or Greed ..... and why?*

I have my own interpretation of that question and I would say, if a trader does not understand and respect both aspects, ....  and recognise the advantages and disadvantages of both, he cannot be assured that he will be long term successful.

eg.   There is little advantage in being wrong for a short time if you are not right often enough to turn a profit ............  

Being right only once in a dozen times is fine so long as the position size of the "wrong" trades is a lot less than the position size of the "right" trade.

Entry and Exit price are equally important .... being good at one and bad at the other will give the same result in the long run.

All in my humble opinion, but take with a grain of salt as I am still working at being "long term" successful


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## Wysiwyg (18 June 2011)

barney said:


> *Which is the more detrimental to ones trading account ...... Fear or Greed ..... and why?*
> All in my humble opinion, but take with a grain of salt as I am still working at being "long term" successful



I don't confess to having my brain wired as right as I would like for this game either but to address the fear greed question. I still feel fear of the potential to lose money both in profit and in loss but I don't feel greed. Having neither is better for trading. That being enter on a condition and exit on a condition, not on fear or greed.


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## So_Cynical (19 June 2011)

Ves said:


> Just a beginner question - but is this what is referred to as 'discretionary' trading? Or is it closer to "investing" than "trading"?




Not 100% sure what to call it...i do trade as in 'open a position' but have an open ended management strategy that i simply call 'discretionary' i am trading in order to build a 'buy and hold' portfolio that i'm low cost averaging into.

I'm trading to establish free carry that i plan on holding as an investment.


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## tech/a (19 June 2011)

tothemax6 said:


> 'Run its course' is as objective as 'it smells right'. You have no idea what would have happened had the Fukushima incident not occurred. You are guessing. It would most likely have continued upward in valuation given the continued good announcements. It is back down in the 6s because of continued investor uncertainty, both of the prospects of equity in general (ASX200 continues downward), and the prospects of nuclear power given the reaction of Germany.
> 
> I might add to 'it only matters if in aggregate you are *right*', that 'it only matters if you know _why_ you were right, and were not guessing like a game of roulette'.




Max
You still don't get it

I don't care what the future holds a my trading ( The discretionary trading) is kept skewed to market. In these times I trade short term intraday to a few days.

If my loss is limited to missing a quick upside move due to say Greece striking oil in every back yard--- which I couldn't predict! Then I'm happy.
For me it's minimum risk and maximize reward where possible.
If those interested in the PEN example want to look at the string of my analysis they will find technically I'm coming from.

Your obviously a fundamental trader so understandably your incorrectly assuming I think I picked the up coming tsunami.

Anyway perhaps some technical education may come in handy for you.


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## ROE (19 June 2011)

Country Lad said:


> One of my pet hates is the term _"averaging down"_ which I consider as a nice way to say _"I stuffed up by not selling and I am now compounding the mistake_".
> 
> That should bring a few out of the woodwork.
> 
> ...




I average down on stocks as well as average up it is a matter of time stock I average up and down it comes good - Most of the time i got it right, occasionally I got it
Wrong but the right one return outstrip 3 to 1

CCP average down from $1.20 and average up once so far at $4.30
CCV average down from 60 and average up at 76 ..recently average down 64c
TGA average up from 1.50 last one 1.87
NVT bought at 1.95 average up 3.80
CAB start 6.20 last average down 4.44
QBE first parcel 16.50 when the time is right i will average down -
FLt average down from $7 to last one $5.00

It been a few years find no reasons to sell any - may get chance to averge down again

there are stock I prime for average down but never ever get there
Cil never trades at price lower than 1.18 i get in now take over target
Fge never trades below 1.30  i got in
Wwa got take over offer

I am start buying another one ready to average down then it jump 5% 
i will wait patiently to average down but i am afraid it wont get there
Prime target for future years multi baggers

ps the PEN stock to me speculation at best, gambling at worse


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## tothemax6 (19 June 2011)

tech/a said:


> Max
> You still don't get it



Well, I'm going to agree on that one.


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## Assasin (19 June 2011)

I believe the terms averaging down or up should be abandoned.
Everytime I put money into a stock it is to be on it's own merits, and that where the sp is at the time, that I'm banking on it being higher in the near future and beyond. If I have previously purchased at a lower price is just a bonus. Also, to purchase another parcel of the same stock means that you couldn't find another stock with the growth that would deliver what you are anticipating.

On the flip side, to buy a stock under what you have previously bought for, obviously proves you have made an error (i'm putting my hand up here), but to purchase more, could only be done on it's own merits, and that you again are confident that the sp is going to grow from purchase price. Again, it must be said, is there no other prospects out there to put your money into?

To term this as averaging up or down is garbage.

Just my thoughts.
Cheers.


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## Boggo (20 June 2011)

Went to "The PUB" at Mooloolaba for a steak last night.
On the wall there is a sign related to gambling, it says...

"_If I hang in long enough I will win it all back_"

and underneath that in large bold print...

_WANNA BET ?_

Relevant to this discussion perhaps ?


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## tech/a (20 June 2011)

Max

A mentor has pointed out that in essence we are on the same page
But with reference to your statement that only profit matters and in line with the essence of the thread title.

You can be right 90% of the time and if wrong long enough for that 10% to blow up your account!


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## tech/a (21 June 2011)

While some have managed to average down and eventually profit,I find averaging down has the serious flaw of not being able to admit your analysis at the time is wrong.

Fundamentalists end to average down more than technical analysts I've noticed.
It appears perceived good value is seen as even better value in a falling stock price.
I've not seen a comment like----the market has this priced at a lower than my current valuation they must at this time be right!

Has Antonella done research on how often a company valued by experts as low actually reaches a higher figure.
Ie buy recommendations-- fundamental ones.
I cant believe they would be better than 50 %


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## sinner (21 June 2011)

Only just spotted this thread, thought I would give a real world example, since So_Cynical already brought it up.

Presenting:

"Quotes from the APN thread"




I shorted this pig several times on the way down for small swings, didn't make the whole 30% decline from $1.8 to $1.3 but got enough of it to make it worthwhile.

Personally, I think it would be pretty hard to come up with a good reason to have held APN from $1.8 down to $1.3. Why not just set a buy stop above resistance if you want in? I can't think of any fundamental reasons either: the first fundamental I check is the debt/equity and interest cover ratios. I only want to short pigs after all. The simple stats show this pig was wearing way too much lipstick even back in 2010.

New traders, what would you have preferred to do? 

Hold the stock for a 30% decline? Be flat for a 30% decline? Be short during a 30% decline?

Hint: Only one of those options leads to a 30% potential profit.

I wish So_Cynical and his friends at Orbis Capital the best of luck.


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## So_Cynical (21 June 2011)

sinner said:


> I wish So_Cynical and his friends at Orbis Capital the best of luck.




Thanks...i need all the luck i can get, APN the worst (post GFC) performer in my 24 stock portfolio.

Have added this thread to my favourites and will post when the inevitable turn around happens, or when Orbis and my self sell out.


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## tech/a (22 June 2011)

Of the 24 So Cynical how many are averaged down from their original purchase price?


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## Sean K (22 June 2011)

It seems a reasonable statement to make that you should cut losses early when 'trading', and proportionally so for long term investing. 

Would be nice to be right more often than not though.


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## tech/a (23 June 2011)

kennas said:


> It seems a reasonable statement to make that you should cut losses early when 'trading', and proportionally so for long term investing.
> 
> Would be nice to be right more often than not though.




Dont agree Kennas
If your making a LOSS my view is regardless of time frame.Get out of it before it becomes a costly one.
However when it comes to profit then longer timeframes tend to see deeper retracements in open equity as the timeframe is increased.
But never in my view the go from open profit to loss --- worse averaging down after giving back open profit.


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## sinner (23 June 2011)

kennas said:


> It seems a reasonable statement to make that you should cut losses early when 'trading', and proportionally so for long term investing.
> 
> Would be nice to be right more often than not though.




If you want to be right more often than not then trade a system with a high win rate. On stock indices my win rate is usually 70%, trend following in forex more like 40%. 

But when I'm losing 60% of the time in forex it doesn't feel "not nice", it actually feels good to know each loss is bringing me that much closer to my next win.


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## tech/a (28 June 2011)

If you read the MMX thread ( I cantbpaste the link ).
This is another perfect example of this threads topic.


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## Boggo (28 June 2011)

My attitude below to stocks that turn down, tighter than normal stops due to current market and time of FY etc.

I would rather be wrong and lock in profit than wrong and give it all back.

My two best recent performers exited last week, stop trigger levels circled.

(click to expand)


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## So_Cynical (28 June 2011)

tech/a said:


> Of the 24 So Cynical how many are averaged down from their original purchase price?




Sorry Tech i somehow misssed this when you first posted it..

Out of the 24 current stocks i hold, i have averaged down into 10 of them...now of the 10 stocks i have averaged down into, 4 of them are in profit right now at this low point in the market and another 3 stocks of the 10 are within 15% of break even. 

Here's my portfolio % P/L straight outa Stator.
~


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## sinner (21 September 2011)

So_Cynical said:


> Thanks...i need all the luck i can get, APN the worst (post GFC) performer in my 24 stock portfolio.
> 
> Have added this thread to my favourites and will post when the inevitable turn around happens, or when Orbis and my self sell out.




Other stocks in Europe have been distracting but I just remembered this thread after looking at the APN chart today.

Thought it would be worth checking in with So_Cynical and seeing how apt he thinks the title of the thread is...

Wish I had kept APN on the list of pigs to short...finally starting to look sort of maybe oversold. Time to average down again? I wouldn't bet on it :


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## So_Cynical (21 September 2011)

sinner said:


> Other stocks in Europe have been distracting but I just remembered this thread after looking at the APN chart today.
> 
> Thought it would be worth checking in with So_Cynical and seeing how apt he thinks the title of the thread is...
> 
> ...




My last buy in APN was at 0.755 ill quote from the APN thread below.



So_Cynical said:


> (19th-August-2011) Bit the bullet and took my second and last small average down into APN today, waited for the afternoon sell off and got in at 0.755 bringing my average price down to $1.55. :crap:
> 
> So i have either made my worst trade in the last 12 months even worse, or made my overall APN position a little better...time is my greatest advantage over the market and of course time will tell all.
> 
> Big picture wise APN did grow their outdoor and radio revenues and still have total revenue of over 500 mill, a market cap of around 480 mill and debt of 650 mill, so the headline numbers aren't that bad...APN have a solid base to grow an on-line presence via the new acquisitions, the NZ Herald and there local papers and radio stations...i would argue a perfect base to leverage low cost on-line content off.




So at-least i caught some of the very bottom, as the SP does seem to have found some support at long last, the coming dividend reinvestment will drop my average price a little further....time will tell all and im in no hurry.

------------------------------

Re: It doesn't matter that you're wrong, only how long you stay wrong!!

Well im not a trendy so its just not as important for me as it is for the trend followers, the way i invest staying wrong is measured in months and years not hours, days and weeks....time is one of my great advantages over those with out the time to let there investments move.

Brings to mind a chart i saw when i exited my MRE position for a very small $ and % profit...see MRE thread https://www.aussiestockforums.com/forums/showthread.php?t=8922&page=18

Have a look at the chart below and consider my options over the 1145 days in total that i was an MRE shareholder.

ok so i could of exited with a 5% loss very early on and moved on to buy another falling stock in late 2008.

Or i could stay in, average down (3x), get a dividend and franking credits, get a Capital return (tax free) and finally sell at the small profit that i did.

Sure there's a big opportunity loss...but that's a bit of a fantasy loss because its not really measurable..i did make money on this and i was wrong for a long time, in fact maybe 90% of the time i held.

It doesn't matter that you're wrong, only that your right in the end, stick to your plan, and make good decisions...there's a time to admit your wrong and take the loss and there's a time to buy more and keep going.
~


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## So_Cynical (29 March 2012)

So_Cynical said:


> (28th-June-2011) Sorry Tech i somehow misssed this when you first posted it..
> 
> Out of the 24 current stocks i hold, i have averaged down into 10 of them...now of the 10 stocks i have averaged down into, 4 of them are in profit right now at this low point in the market and another 3 stocks of the 10 are within 15% of break even.
> 
> ...




Nine months down the track from my quoted post^^^ lets see how my time advantage is working out for me. 

Below is a screen shot of the % profit and loss of my portfolio as posted in 28th-June-2011 with on the right hand side a screen shot of same from 5 minutes ago....notice APN (shaded) is actually a 10% bigger loser than it was, but also notice the 4 stocks im holding that are in 3 figure profit, compared to the first screen shot with no stock in profit over 100%.

Total portfolio value up around 6.5% in 7 bad and 2 good months, with div reinvestment closer to 9%
~


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## CanOz (29 March 2012)

Wow, good on ya mate.....I couldn't stomach that kind of draw down, and certainly not adding to losing positions....but each to their own. I have tested some intraday systems that use no initial stop, but I just can't handle the  'what if' scenario. I need the security of a stop loss, but that's my personality.

Incidentally, stops hurts performance, generally...in my experience.

Cheers,


CanOz


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## skc (29 March 2012)

So_Cynical said:


> Nine months down the track from my quoted post^^^ lets see how my time advantage is working out for me.
> 
> Below is a screen shot of the % profit and loss of my portfolio as posted in 28th-June-2011 with on the right hand side a screen shot of same from 5 minutes ago....notice APN (shaded) is actually a 10% bigger loser than it was, but also notice the 4 stocks im holding that are in 3 figure profit, compared to the first screen shot with no stock in profit over 100%.
> 
> ...




Can you arrange the table so the same stock is on the same row?


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## So_Cynical (29 March 2012)

skc said:


> Can you arrange the table so the same stock is on the same row?




I don't know a fast way to do it so would have to do it by hand, as in edit a picture file or draw confusing lines all over the place...actually cutting and pasting shouldn't be that hard.

Ill have a go on Sat nite after a few Shiraz's.


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## skc (30 March 2012)

So_Cynical said:


> I don't know a fast way to do it so would have to do it by hand, as in edit a picture file or draw confusing lines all over the place...actually cutting and pasting shouldn't be that hard.
> 
> Ill have a go on Sat nite after a few Shiraz's.




Thanks. Only if you have time mate.


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