Forum Archive Index - February 2004

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

Hi Woody,

>
> Snoopy
> Answer to the first question NO! my system has matured as I have
> learnt. AND I have since starting this chat forum been viewing a few
> FA techniques. In fact I used the fact that  in general .dot.com
> companies are losing money to purchase Puts in Cisco, Amazon and
> Microsoft the last few weeks. I still used my TA signals to enter:
>

So you are now using F/A to zero in on some trading opportunities in 
shares.  Pleased to see you are still improving Woody.  We will make a 
good F/A guy out of you yet! ;-)

I think over the last couple of years Phaedrus has modified his trading 
system to include more information on moving averages.  (this is just 
from memory, I am sure Phaedrus will correct me if I am wrong)

>
> However I picked them out using the News and the beta coefficient
> which is a US Stock Fundamental ratio of the volatility of the stock
> to its index. 
> 

Yes I am familiar with the concept of 'Beta'.  If you believe in 'Beta' 
then you have to realise that it means a share can jump significantly 
either up or down.    Personally I don't use Beta, because I can't see 
the value in buying a share that might suddenly plunge in value.  But if 
a share is in a trading range and the price is high then I can see the 
appeal in selecting a high Beta overpriced share and then shorting it 
(as you can do if you trade in the USA).   You are starting to make a 
dangerous amount of sense here Woody ;-).   A potential problem with 
this method is that 'High Beta' stocks can suddenly behave like 'Low 
Beta' stocks and no-one will tell you the rules have changed.

Ruth gave us some good advice to take a periodic reality check.  It 
sounds obvious, but sometimes the simple obvious things are the 
things we forget to do!    So good advice there from the Cap.

Getting an outsiders perspective on the Airline industry may have kept 
me from ever buying Air New Zealand.  But back when I bought them, I 
had never heard of Buffett, not the internet for that matter.     So my 
sage words on this matter are:
*You should for any share in which you invest, you should try to figure 
out how large the market is, and who the price setting players are.*    
Generally you should look to invest in the price setting players.  If you 
can't find any, then try another industry!

Anyone else got some sage words of advice on this theme?

SNOOPY


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