It is official. I have no trades going. All my money is safely earning 5% or well allocated in a diversified mix that even Harry Markowitz would be proud of. I'm still looking for good trades so please everyone chime in here and give me some ideas.
There are a lot of people calling this market a bubble. I for one don't think it is. Let me tell you why. EARNINGS. in the tech bubble of the 90s we had stocks that had never turned a dime of profit trading at 60 70 or even 100 dollars per share. that is not a good thing for long term holdings. In today's markets we have a lot of things going for us that we didn't back then. In the end I am going to keep it simple. looking for companies who have a one year earnings growth rate that exceeds the P/E Ratio. I.e. if a stock has a P/E of 100 and a earnings growth rate of 100% in the last year I am OK. If corporate earnings are less or nonexistent, I am hot water when the market turns. Remember earnings drive prices and when we don't see earnings it is something else driving that demand. If we enter a bear market the company with no earnings will crater as smart money moves to value. so watch for good earnings on your bullish trades and stick to proper position sizing.
Well now. In most circles that are replete with neophytes of trading there is always this expectation that the summer time is the time that all the slack jaws in the market just loaf and wait for fall to roll around. For all my fans that are wondering; I am long and not doubting myself. Stops are in place and I give the overbought condition of the indices no thought. You may remember ABM from a few posts back. Yes I am long and pleased with the trade. when I last looked I was up about 10%. A rain maker? No. A good trade? yes! I also went long BTU about a month ago. I like coal for future upside... Why? Most of the electricity in the USA comes form coal fired power plants. If I am wrong; oh darn. I bought again on a later breakout; thus doubling in. I opt for a doubling method when I scale in to stock trades' unless I can't come up with the needed money. If any body has questions...Reply to this post and we can shoot the breeze. Good luck this week in the capital markets... Oh and one more thing. You are not smart enough to match brain pans with the market; so don't try. Just trade with confidence and let time tell the story! Your pal- DD
Don't let recent movement in the market detour you in your quest. A Trading Ninja is always confident in his plan. Pounce on the enemy, and eliminate doubt. Who is the enemy? You can find the answer to that question by looking in the mirror, or on Mad Money. Don't give in to the temptation to think that something needs to change in the market before we can begin making money.
THE MARKET NEVER CHANGES. The only thing that changes is how we perceive the market, hence our beliefs about the expected outcome of our actions will change. Stick to what makes you money. As traders we can not afford to fall prey to self doubt. YOU are the best judge of the market concerning your trades, and your money.
Well we have had quite the week. I have talked to lots of traders about what is going on and most of us agree that the market has most definately moved. What I can't believe is that nobody told me it was going to be to the downside.
If you are going into Monday short, be careful and willing to admit you were wrong. Its one thing to say the market is bearish now because of deep pull back. It is quite another thing to make money on that belief short term.
I am still in some bullish positions after all this but I am not treating them any differently than I would if the market was still in the calm seas of the last 6 months or so. Right now I am doing 3 important things...
That is all for now...
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