Yesterday...Seems So Far Away
Friday, October 12, 2007 at 10:22AM
Rather than rant about what is working well and what is not today, I'd rather talk about yesterday. I am seeing a lot of questions coming through about "how I reacted" and asking "what I did" in response to yesterdays change in momentum.
I didn't panic.
In fact, if it weren't for a phone call yesterday, I might not have noticed.
The first thing I did was start selling off some of my positions. Primarily BIDU due to the downgrade. Once I noticed it was moving against me (thanks random caller) I reduced the position by about 60% to lock in some profits. That is what really pissed me off about yesterday, but keep in mind, my cost basis was $130 (Check my archives if you doubt me).
I added to MON. Did you expect anything else? I plan to make a market in the Nov's.
All of them.
I dollar cost averaged in only the best deals available, such as HANS, AMZN, ISRG, DRYS, FWLT, VDSI, PCLN and a few others. Being the great companies that they are, they decided to pay me back today.
I dismissed a few losers, and entered a few new positions...
However, I think many of you sometimes forget that I like to play things somewhat safe with my accounts. I stay diversified at all times, and always have a hedge against the market and or my account positions. Here are some examples...
Despite losing some big UNREALIZED gains, I made for a lot of them with nice blow-ups in ATI, LDK, SPN, ZION, RAIL, MAS, THQI, NCS, PAYX, CPA, WNR, CAH and PNR.
I also own Gold (GLD), which is intended to be a hedge.
And I always hedge with other instruments, specifically S&P Futures (Short), Crude Futures (long), and added to some Index puts on the Nasdaq (small position).
Yesterday was fine. Like I have always said, I try to put myself in a position where I don't care about the market. When I start my day every morning, I don't run to see what the market is doing, I run to see what my account is doing. I try to put the market in position where it is irrelevant to my account.
When I received this phone call that alerted me as to the change in the market, and asked how I was doing...I glanced at my bottom line and said, "Fine." Upon further inspection, I was able to make some necessary adjustments to moderate unrealized gains and turn them into realized gains, cut some losers and buy everything that was appropriate. Eventually it gets to the point where you become a well oiled machine.
Another day, another dollar.
The market was due for a little exhale, and I bought bullishly with confidence. If it were going to be a big deal, you would have seen a much bigger drop than we saw. Yesterday was an obstacle, and the Option Addict played though.
Recommendation: Cannonball often.
Long: Diversification
Short: Panic
Disclaimer: I cannonballed myself yesterday to relieve panic because I wasn't diversified.
I didn't panic.In fact, if it weren't for a phone call yesterday, I might not have noticed.
The first thing I did was start selling off some of my positions. Primarily BIDU due to the downgrade. Once I noticed it was moving against me (thanks random caller) I reduced the position by about 60% to lock in some profits. That is what really pissed me off about yesterday, but keep in mind, my cost basis was $130 (Check my archives if you doubt me).
I added to MON. Did you expect anything else? I plan to make a market in the Nov's.
All of them.
I dollar cost averaged in only the best deals available, such as HANS, AMZN, ISRG, DRYS, FWLT, VDSI, PCLN and a few others. Being the great companies that they are, they decided to pay me back today.
I dismissed a few losers, and entered a few new positions...
However, I think many of you sometimes forget that I like to play things somewhat safe with my accounts. I stay diversified at all times, and always have a hedge against the market and or my account positions. Here are some examples...
Despite losing some big UNREALIZED gains, I made for a lot of them with nice blow-ups in ATI, LDK, SPN, ZION, RAIL, MAS, THQI, NCS, PAYX, CPA, WNR, CAH and PNR.
I also own Gold (GLD), which is intended to be a hedge.
And I always hedge with other instruments, specifically S&P Futures (Short), Crude Futures (long), and added to some Index puts on the Nasdaq (small position).
Yesterday was fine. Like I have always said, I try to put myself in a position where I don't care about the market. When I start my day every morning, I don't run to see what the market is doing, I run to see what my account is doing. I try to put the market in position where it is irrelevant to my account.
When I received this phone call that alerted me as to the change in the market, and asked how I was doing...I glanced at my bottom line and said, "Fine." Upon further inspection, I was able to make some necessary adjustments to moderate unrealized gains and turn them into realized gains, cut some losers and buy everything that was appropriate. Eventually it gets to the point where you become a well oiled machine.
Another day, another dollar.
The market was due for a little exhale, and I bought bullishly with confidence. If it were going to be a big deal, you would have seen a much bigger drop than we saw. Yesterday was an obstacle, and the Option Addict played though.
Recommendation: Cannonball often.
Long: Diversification
Short: Panic
Disclaimer: I cannonballed myself yesterday to relieve panic because I wasn't diversified.
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Reader Comments (118)
I expected no less from you,,,nice post
Because of you and others on the blog, I am also still smiling today. Yesterday didn't affect me much either, as it probably would have before.
As a matter of fact, I got busy, did some buying, and today, my account is almost as healthy as it was yesterday, before lunch.
I'm not a well oiled machine, but I at least knew how to react. That is all thanks to my learning here.
Thanks Again (I could never say it enough)
Jeff - as always it is invaluable to see behind the curtain of the master, thank you.
Didn't panic yesterday...that is my story and I am sticking to it. Because of everything I have learned here, my acct is right back where we started yesterday. Plus some actually. A couple of puts helped stop the bleeding. I never would have had them in place a few months ago.
Do any of you OAs use the new TOS blackberry application. I just downloaded this and I must say it looks to be awesome. I was using the thinkmobile app., but this new download is great. The trading platform is always just a click away. No excuse for getting caught with your pants down.
Hope everybody had a great day today.
Barry
Thanks for sharing. I'm definitely not a well oiled machine yet but less squeaky than I was before.
liz
My account is actually doing better today than it was yesterday BEFORE the drop. And, I did take the opportunity book a few profits today.
What a great post! Someday I hope to be a well-oiled machine with regard to trading. Meanwhile, um, I'll keep cannonballing!
A question about your futures and index hedges...doesn't that work against the profits that you are making elsewhere? Are these very short term positions (day trading?).
Patti and Bob(and Pam),
I'm reposting my answer to you from the last thread before clean cups...
Bob (and Pam), I want to meet that guy with the Porsche! That's my motivational picture I keep next to my monitor. Right now my license tag says WITCH-1 but if I ever get my Porsche, it will probably say THX OA!
Patti, on YGE I see what you're saying about the wild swings. Before yesterday, that stock wasn't even on my radar. After I read about it and saw the chart and saw it was right on diag. REE I jumped in. I didn't like this morning's down draft but it never came close to crossing the line so I'm keeping it. The recent increase in volume tells me that institutions are just getting in. Barring a big correction, which I know could happen at any moment, it should give me a nice ride for a while.
From Michael Drew, "A cup with handle pattern is one of the most common consolidation patterns, usually occuring after an extended move in price." It doesn't specify up or down movement but my book shows the pattern after an uptrend so you may be correct.
Can someone weigh in here? Cup and handle in uptrends and downtrends?
AMZN, HANS, NVDA, MTW and FLIR were at REE this morning. They have gone up some now. Depending on your rules, all are still potential picks.
James H.
I've been quite happy with YGE myself. Didn't come close to crossing my line either. Thanks again for putting it on our radar!
That's how us newbies learn how to handle so-called panic situations to where they no longer become panics, but just part of playing the market. That helped me tons.
Brett,
I took down some DRYS this morning along with adding to my CMI position. Got back into AAPL and NOV looks to still be at diaganol support. KSS is at support, but I am going to evaluate at the end of the day. CVD is at support, but I already own stock there. And I'm not sure, but looks like DECK is a cup and handle forming. I need to study it more.
Michelle
My 2 cents
I'm with you on FIG because I have a line drawn in right at about $25. This could be a nice little breakout.. I'm just not sure if this pattern is one of the ones that can indicate trend reversal. Dunno...
Hmm...
greg
I have to disagree. I lost $14,000 unrealized gains yesterday and it was just as tough as times when I've lost capital, maybe tougher...... Guess it depends on the trader.
What I would have done differently would have been to sell some of my positions that were tanking, but I was unable to be at the computer and had to rely on stops, which never seem to trigger quick enough when a position is moving against you (laughter.)
Michelle
If you just jinxed that move, I'm gonna be very upset with you! :-)
Weren't you glad to see it showing such strength yesterday afternoon? It never gave me a reason to dump it.
Thanks, man.