PANIC!!!!! (Strategies for those long)

[Sean K]

I expect we'll get closer to that 10% drop you talk about yet. We're through 40-day MA on the XJO/XAO and still a long way from the 200-day MA. Price has fallen below the extreme of Wednesday and seems to be continuing down.

With minor support at 5800 broken, next stop 5660 ish. More support there. Might bounce, then head to 5450 ish, as tipped in the XAO Analysis thread. Hope I'm wrong for people buying on the way down.

 

[nizar]

Re: PANIC!!!!!

Nizar---how'd I go???

Haha - u went fine.

I really miss the bullmarket though and those quick trades, WMT, MLS, PEN, AUZ, DYL, etc, it was good income. That October-January period was gold!

Oh well have to adjust and learn new things i guess thats how the market is.

JML - a good pick, initially i picked it up on my scan on Monday as it closed on the all time high, though i havent took a position - Yet. Its held up better than most during these volatile times though.

 

[CanOz]

Re: PANIC!!!!!

Haha - u went fine.

I really miss the bullmarket though and those quick trades, WMT, MLS, PEN, AUZ, DYL, etc, it was good income. That October-January period was gold!

Oh well have to adjust and learn new things i guess thats how the market is.

JML - a good pick, initially i picked it up on my scan on Monday as it closed on the all time high, though i havent took a position - Yet. Its held up better than most during these volatile times though.

Do you short any stocks Nizar?

Cheers,

 

[cuttlefish]

So as a fundamental trader you only have ENTRY RULES??

fundamental investing has fundamentally based exit criteria as well as entry criteria. True fundamental investing is not buy and hope by any measure.

A simple example of one type of fundamentally based exit criteria would be if price rises to certain p.e. or earnings falls to bring price above a certain p.e. then exit.

Because nothing is absolute - typically a better way would be if price rises to a level where P.E. is a certain proportion of current overnight cash or long bond yield then sell. (so judge value relative to other investment instruments like cash and bonds).

(of course there's a myriad of ways a fundamental investor might define 'value' but it illustrates the point).

 

[tech/a]

Price has fallen below the extreme of Wednesday

And there in lies the analysis and why we do it.
There is NO support currently.
There has been no demand displayed.
for Elliot pundits highly likely wave A of the correction isnt in yet.

 

[Sean K]

And there in lies the analysis and why we do it.
There is NO support currently.
There has been no demand displayed.
for Elliot pundits highly likely wave A of the correction isnt in yet.

Yes, I agree. A bit more to go.

 

[Out Too Soon]

And there in lies the analysis and why we do it.
There is NO support currently.
There has been no demand displayed.
for Elliot pundits highly likely wave A of the correction isnt in yet.

Of cause there's no support, the only action is selling, even myself with only 20 months experience sat & watched today, the stocks I bought yesty morning are in the red. They are still a bargain although would have been a bigger bargain today & would only become a loss if I sell at a loss (which I wont).
Alan Kohlers insight into previous corrections was that for the warning start of a correction this 3% HAS BEEN BIGGER & SHARPER than previous warnings from 87 through to present & therefore we could be in for more than 11% of correction! OUCH! (maybe, could be)
Anyway, I am still ahead having sold APG & JML (profits) & nothing else.
I still have access to some cash & will try to pick the bottom, I wont lose because I wont use a stop loss & I wont sell at a loss.
Haven't heard much from ppl like MichaelD lately who put down beginners & like to tell everyone they'll lose money without stop losses & a mechanical plan. Guess they're busy in their new taxi driving jobs. :

A very basic lesson for beginners, it only becomes a loss when you sell it at a loss- share markets always rise on average faster than any other investment. So if you have to hold it for 6 months - do it.

 

[money tree]

A very basic lesson for beginners, it only becomes a loss when you sell it at a loss- share markets always rise on average faster than any other investment. So if you have to hold it for 6 months - do it.

oh dear. lets all pray nobody is dumb enough to swallow this. I know people who paid $6 for DVT back in 2000, didnt sell using the same dumb argument.

what about the Japs? They bought the Nikkei in 1990 @ 40,000. 16 years later and they are still down 60%.

A loss is a loss whether you stick your head in the sand or not.

 

[Rob_ee]

Posted by Out To Soon
I still have <<access to some cash & will try to pick the bottom, I wont lose because I wont use a stop loss & I wont sell at a loss.>>

I have only been trading for 2 months and have executed 3 trades so far, nothing open at the moment.

The above seems like an astonishing statement to me and goes again everything I have ever read ..many books by past and present traders... and a few very generous people on this board who have tried to educate me to get over my prejudices on how I think the market SHOULD behave.

If you have been trading for 20 months you are fortunate to have participated in a Bull market AND I may be fortunate to have started in what may become a Bear market. It may teach me a few things in the following days/weeks....

Just out of interest which stocks are you holding ??? Blue chips which will/may recover over time or the hopefulls with dreams of finding something in the future and then having funds to get going to production.

After only a few months obviously I know nothing as yet but am just looking to further my education ?

The other thing I don't understant is why would you sell JML.... has had a stellar rise over the past few months and has held up extremely well over the past 2 days.... In other words why sell your best gainer and hang on to losers ?

Rob

 

[wayneL]

It's how some of the daytraders of the late '90s became long term investors.

 

[CanOz]

It's how some of the daytraders of the late '90s became long term investors.

Wayne...whats the idea of the "cuts of beef" avatar???? Are you trying to disect the bull market? Is it the end of the bull? hehehe....the suspense is killing me.

Cheers,

 

[wayneL]

Wayne...whats the idea of the "cuts of beef" avatar???? Are you trying to disect the bull market? Is it the end of the bull? hehehe....the suspense is killing me.

Cheers,

Well.... the Bull is dead. Had to do something useful with the carcass!

....and some of the others I had in mind "could upset some viewers"

 

[Out Too Soon]

We'll see wont we.
We're trading ASX not Nikkei. I cut my losses on Flight Centre And CCL last year at a loss before they climbed again (for example). I sold NMS on a stop loss just before it shot to 50c a gain of over 100% & I have had lots of unnecasary losses trying to find the right level for a stop loss. The fact is there is no correct level unless you use a mechanical/automatic system that simply relys on picking more rises than falls - very inefficient & when you have a correction like now everythings an auto loss-
I prefer to think on my feet (well bum) & learn as I go & one thing I have obviously learnt is stop losses don't work- not for my style anyway, also no one should ever push stop losses on beginners as a must.
Maybe I should add I rarely use a stop loss now as a precaution against a sudden fall on a stock that is already well in the positive.
The word "Stop Loss" is a complete misnomer. :
A lot of ppl on this forum agree with me on this but wont say anything because of endless arguments it causes but I feel compelled to share my little experience with complete noobs that can be constantly barraged with the stop loss drivel same as I was. When it all comes down to it it's up to you to find your own groove.

 

[nizar]

It's how some of the daytraders of the late '90s became long term investors.

LOL so true.

 

[Rob_ee]

Interesting reply OTS.

That sort of philosophy works very well in a roaring Bull market where everything.. even the worthless (as yet) specs soar to high levels.

I wonder though how well it works when the market turns south for any length of time.

In one thing you are certainly right.
You will NEVER sustain a loss (on paper anyway) until such time as you sell.

I for one am one of the misguided souls who have had stop loses drilled into me as a necessity for long term survival.

So far the score is 1/1/1 on my 3 trades.

Got stopped out of RTM (now MAN) from 4.8 buy sell 4.2 for a $168 loss
MAN is now at 2.6c so the loss could have been bigger

SMY bought around 2.30ish stopped out at 2.99 on a dip and watched it climb over $4 soon after for around $900 gain and broke about even on GPN sold 5.8 now 4.8.

So to me taking a small loss seems like the way to go.

Another of my failings is that I only ever buy a new or recent high as opposed to bottom picking.

Needles to say MS is not coming up with any buy candidates at the moment.

To each his own I guess

Rob

 

[MichaelD]

Haven't heard much from ppl like MichaelD lately who put down beginners & like to tell everyone they'll lose money without stop losses & a mechanical plan. Guess they're busy in their new taxi driving jobs. :

Now THIS is a funny post.

1. I haven't posted much lately because there's no point when everyone's a bull market champion. Things like risk management, stop losses, money management and respect for leverage simply don't matter, do they? Well, guess what, those same bull market champions are the ones who are now squealing in pain about how unfair it all is and demanding reassurance that the pain will soon be over. (Or they just close their eyes and pretend it's not really happening). I recall exactly the same happened last May. How quickly we forget.

2. As for my trading plans, no long term stop losses have been hit yet. If/when they are, I'll sell and bank mostly multi-R profits from the pyramided positions which I have let run for the last 10 months.

 

[tech/a]

Michael like you I hold a longterm portfolio.All is still in tact.
Below is a composite/custom index of all stocks held.
The Arrows show the effect so far on the years open profits.
Chart is weekly.

Its getting easier to spot the market fodder! Dont you think.

 

[cuttlefish]

A very basic lesson for beginners, it only becomes a loss when you sell it at a loss

Or its delisted and goes into administration or is bought via a takeover at 1/10th the price you paid for it (usually because that was an easier option to delisting it and putting it into administration) or it issues so much additional capital whilst treading water that after the second 1 for 10 consolidation your holding has been eroded to an unmarketable parcel that would cost you more brokerage to sell that what you'd get back for it.

Even value investment has value based 'stop losses'. i.e. even Ben Graham had his own value based criteria for 'stop losses'. Nothing is a certainty forever and if you're not reviewing investment or trading decisions objectively when new information comes to hand then you are unlikely to consistently out perform in the long term.

 

[rederob]

When I see the stock market reflecting what is happening in the real world - the world outside the financial markets - I will sit up and take notice.
I anticipate more "pain" next week, and then it will probably all be forgotten until the next time.
My strategy remains one of adding to positions on the cheap: Energy stock are my preference, and yield plays next (probably add to APA and see if the Government wants to pipe water instead of oil/gas!).

 

[Out Too Soon]

Just sharing!
Still have cash for when we hit bottom &/or rallies on the way so while I may have some so called bottom draw investments I'll still be able to play. What's more I still may off load some at a profit on a rebound before the final plunge to what Alan Kohlers simple historic charts indicate could be 5200.
Much better scenario than losing 10% (or whatever) of everything. :

The word "Stop Loss" is a complete misnomer!