Forum Archive Index - July 2001

["tennyson@caverock.net.nz" <tennyson@caverock.net.nz>]

Hi Mike,

> 
>
>Snoopy  you  are  content  to hold  telstra  ( a  good  company 
>with  over  90% market  share  ) and  rightly  so , the  difference 
>between  a  long  term  holder  and  a person  using  charts , and 
>trading  accordingly  is  that  they too can  hold  telstra  albeit  
>on  a  revolving  basis  thereby  increasing  their  holding  with 
>no  extra  outlay  by pouring    the  profit back in  to  the 
 stock.  
>
>


That depends on a few things.   The worse any downturn is after 
the the uptrend the better your trading strategy will look. Getting 
out of a trend may lock in your profits, but it may also mean you 
miss out on the next up trend while it is confirmed.  Remember even 
Phaedrus only claims to get it right 60% of the time  (which I 
should add I find quite impressive).   A lot of the 'great trading 
profits' are based upon periods of sufficient volatility in the price 
and the market being sufficiently liquid to allow you to jump in and 
out when you want to.   

If you take the theoretical case of a share that just rises steadily 
in value, then any sort of trading would be madness and would only 
serve to reduce your profits.  Of course, no share behaves exactly 
like this, so to some extent the point is moot.  Nevertheless the 
closer a real share approxiamtes this ideal the less likely trading 
will provide you with more capital at the end of the day than buy and 
hold.   Take a share like Wrightson's for instance.   I think you 
will find buy and hold is a superior strategy for that over the last 
12 months. 

>
>
>It  seems  to  me  by  being  a long  term  holder people  
> seem to  get  the  idea  that  they  lessen  the  risk  i  would 
> suggest  from  the  compelling  evidence  shown  to  us  from
> Phaedrus  that   more  than  being  a  tool  which  it  is , it 
> basically  mimics  peoples emotions  towards  a particular  share 
> hence  the  support  and  resistance  levels .  there  is  little 
> risk  in  waiting  long  enough  for  a  share  price  to  rise  but
>  there  may  not  be  much  profit  either .  
>
>

For me the greater risk would be being out of the market 
completely at the wrong time.   I'm quite happy to buy a share 
knowing that I don't expect it to move for 6 months or so.   I'll 
trade off a little flat period in exchange for not having the angst 
to get timing my entry point exactly right.

>
>
>I  dont  say  you  are  doing  the  wrong  thing  
> Snoopy after  all  you  have  to  be 
> happy  with  the  decisions  you make just that  you  may  be 
> limiting  your  profit.  
>
> 
I probably am limiting my profit.   But my target this year is a 
relatively modest 12% over the year, so I don't have to adopt 
overly risky strategies to achieve this. SNOOPY



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