Forum Archive Index - August 2000

["Rini H" <the4rs@ihug.co.nz>]

Dear Peter,

Interesting 'trashed stock policy'.

How do you fare with ADV?

It had been trashed on 9/8/2000 to $2.86.

If you time your entry at $2.87, you might need to put a stop loss, because as it happened ADV got trashed lower again today ($2.76).

 

Your theory works very well with The Warehouse, trashed down to $5.26, it's up again to a high of $5.85!!!!!

Well done Peter.

 

Cheers,

Rini

 

 

Traditional investing techniques to a certain extent now seem outmoded. I have
started applying a "trashed stock policy' which defies all basic fundamentals
but for traders seems to work.

Based on the current principle that rumours and speculattion  are quickly taken
on board and prices are driven up to unrealistic levels but when expectations
are not met the correction is decisive and painful(for those on the bandwagon).
The correction in a lot of cases takes the price down to lower levels than
before the rises. That is the time to buy - with the intent of selling when the
price gets back to near the original level.

Recent wins ( I hope)

RBD a few weeks ago were at $1.10 - $1.12. In spite of sales announcement
reporting another quarterly sales growth and that Starbucks were starting to
work the stock was 'trashed' to a low of $1.00. Nothing seems to excite the
market about RBD anyway. Managed to buy ay $1.01 with intent of selling at
$1.12 - nearly there. Got a good divident bearing stock (by default) if theory 
doesn't work.

FLB trashed the other day. Had gone from $2.35ish to $2.45ish on takeover
rumours and all that. Trashed to below $2.20. Got some at $2,21 with intent
selling at $2.35. FLB is one stock I said I would never touch because some
divisions of FLB must be the worst managed operations in NZ and they have only
survived because of Fletchers sufference (thats another story). Getting there
again -quicker than I thought.

Today I'll buy some Orica (ORI) share on ASX which have been trashed from
A$7.40 to A$6.30 in the last 2 days on a less than expected profit
announcement. Still a blue chip (albeit an out of favour industrial) which does
make money with a lowish PE of 9 and plenty of money in the bank. Intent - sell
at $7.20 ( about 15% gain) and wait for the next trashing.

For one whose short term trading has been limited (usually in for longer
periods) the tempations that currently are happening are too great to resist.

Any other views?


Peter

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