Friday, August 10, 2007

End of the Day Thoughts

I want all of you to take a moment to think about something Jesse Livermore said in Reminiscences of a Stock Operator,

"it was never my thinking that made me the big money it was my sitting, got that !"

Now read it again and again till it sinks in, really deep. Now for those of you which if you have not read Reminiscences, please, I implore you, read this book. In the last few days I have had to ride my SRS which I own at 80 from 117 to 96, my SKF which I own from 71 from 95 to 78. Some may call it crazy and many have but as some of you may have noticed I have not put up a chart with a time frame less than daily and in fact have tried to focus equally if not more on the weekly charts. Please do not get caught up in the moment to moment hype of the machine that is Pompom TV (CNBC). One note regarding CNBC is it me or do all they say anymore is how much this or that is "off its lows", forget the facts just give me the fluff.

If that is what you need go to Cedar Point for the day, bungee jump, skydive, but do not fall victim to this with your stocks. I trust you see what I am trying to get across. I stack up with the best of them in falling victim to this. So much money left on the table it pains me more than words can say. Let your winners run, keep your losers small, and above all read Reminiscences of a Stock Operator. It will clear things up for you.

The point of this post is I want to remind you that now is the time to be drawing up plans for your shopping list. For example lets say someone loves the energy story, sees the peak oil thesis and buys into the view that nuclear could be some help. I like to watch Cameco (CCJ). Here is a stock I bought back in October last year about $36 with the Cigar Lake issues. I was stopped out only to watch it whip around and move to new highs AT $56. The recent action has taken it back to $39 right on the trend line support. I am not saying to jump in but what I am saying is to be doing your homework now with regards to what I might like to own say 6 months ago and it got away from me. Is the story the same, has it changed adversely, etc. Do not buy into the weakness but be on the lookout for a turn and its sustainability to initiate a position which you can then add to on further strength once insulated.

I read an excellent story years ago regarding General Tommy Franks and the siege of Baghdad. I will relate what I remember from memory so please forgive the omissions or errors of specificity as I am trying to illustrate a point. The city was surrounded by the 4th cavalry division and Gen. Franks sent in an armored column of approx 70 men comprised of Humvees. Bradley vehicles and some M1A1 tanks. the drove to the center of the city and fanned out in a cone to secure territory for the entire cavalry to enter. He was prepared to lose what he sent in the armored column to ambush or unknown and refused to risk his entire division. Applying this example to your trading that 70 man armored column would represent your initial exploratory position and the 4th cavalry would be your entire account. I hope you remember this example in your trading endeavors. Good trading to you all.

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