Forum Archive Index - February 2000

[Phil Eriksen <phil@acepay.co.nz>]

> The trade of the day from my point of view as a trader trying to eeek out a
> living
> was the person who traded EBT 45 to 60 today. Whilst it was only 5000 shares
> value $2250. My congratulations.

I tried to hold my tongue but cannot.  Lets assume one bought EBT at
.45, and sold them today at .60 cents.  A 6 month chart tells me that if
you bought them in the last 6 months, you probably paid around .45 for
them.  Unless my maths is wrong (school and I didn't enjoy a long term
relationship ; don't trust my maths) the profit on this trade is $750,
before brokerage costs, and tax, which anyone acting as a share trader
should be paying.  Again, the shares have been around .45 for at least 6
months, with very little buying the selling as far as I can see.  Taking
the "middle ground", lets say the shares were bought 3 months ago.  A
$750 profit, less costs, strikes me as a pretty bad return given the
risks involved.  With such an infrequently traded, speculative share, if
flying pigs stop flying and stocks take a hammering, who would rush in
to pick up these shares?..

I don't know, I think holding EBT for any period of time in order to
take a $750 profit is a very risky way to go.  I'd be washing car
windows for the money first.

Admittedly, I know very little about day trading but I do watch the
short term price movements of stock.  Anyone watching, say, Steel and
Tube, will notice a decent spread of prices and no firm direction.  I
have held these shares over a year, managed to buy at a rock bottom
price, and am just waiting to see what happens.  No one knows what is
going to happen.  I know, however, that (a) given a bargain basement
purchase price, my downside is limited (b) i'm sitting back collecting
dividends (c) while nothing is guaranteed, I have enjoyed an acceptable
level of capital appreciation and, given the state of the business,
would expect this to continue and (d) the big question marks that hang
over all stocks (takeovers, market re-rating, some "good news") still
apply to boring old stocks like STU.

While the stock has something to offer to an investor, If I was a trader
I'd probably be buying them still.  Over recent months, the price has
tracked between $1.45-$1.85.  While it's always hard to pick when to
buy, thats the game a trader chooses to play, and that range certainly
offers some room for a profit.  Much more importantly, a stock with some
substance, a stock which is definately not speculative nor overvalued
allows you to invest a larger amount of money, and still sleep.  Rather
than put, say, $2000 in EBT, i'd much rather load up on a share like STU
(0.15 cent gains are much bigger when the multiplier is a decent sum of
money) which I can feel much more comfortable doing, because, if my
"prediction" for short term appreciation doesnt work out, i'd happily
hold them too.

Finally, with the possible sale of the majority shareholding (which
hasn't happened yet, as far as I know) and whatever may happen after
that, there is the chance of a "news-inspired" jump.

How can you go too far wrong?

Cheers,
Phil

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