Swing Trader Alan Farley provides some insight into holding stocks over night:

1. Did you buy in quiet times or wild times?

2. Did you miss your first exit?

3. Is the market closing with buying pressure on the upswing
or downswing?

4. What day of the week is it, and what’s on the calendar?

5. Who’s getting hurt in the current session?

6. What is your holding period for the position?

7. Which companies are reporting earnings after the bell?

8. What total size should you carry overnight?

9. Why is your stock ending the day at that particular
price?

10. What new stock should I buy (or sell) right now to
balance my exposure?

Note that these questions are more geared for traders than investors . . .

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Source:
10 Questions to Ask Into the Close
Alan Farley,
RealMoney.com, 7/19/2005 11:09 AM EDT

http://www.thestreet.com/p/rmoney/theswingshift/10233127.html

Category: Trading

Please use the comments to demonstrate your own ignorance, unfamiliarity with empirical data and lack of respect for scientific knowledge. Be sure to create straw men and argue against things I have neither said nor implied. If you could repeat previously discredited memes or steer the conversation into irrelevant, off topic discussions, it would be appreciated. Lastly, kindly forgo all civility in your discourse . . . you are, after all, anonymous.

5 Responses to “Overnight Holdings”

  1. There’s a big difference between a trade and an investment, right?

    Wrong.

    That’s just a Wall Street mantra that needs to be uprooted.

    Why is it that growth is associated with risky techs and semiconductors; why are buying shares of mega caps “not trades?”

    I buy Home Depot (HD), America’s 2nd largest reatiler, to pick up 3 quick points after the Katrina debacle — did I trade or invest?

    Can you “flip” stalwarts like HD, PNG, and KO?

    The answer is yes.

    “Value” and “Growth” are not opposites — they’re two sides of the same coin.

    The bottom line is this: the trader/investor distinction makes little sense, if any at all.

    Like good Derrideans (French philosopher Jacques Derrida was a former teacher of mine), we need to deconstruct Wall Street’s most insidious binary.

    If you stay in a position that no longer seems attractive to just so you can stick to your philosophical guns and remain “value-oriented,” the only thing you’re doing is insuring your losses.

    Capture gains as they come.

    Pay the taxes.

    And avoid dogma.

    Dogma is for politics, not the Street (as Cramer says in his new book).

    Markets are fluid, mutable beings — your mentality should be the same.

  2. royce says:

    For most individual investors, trading in and out of stocks over the short term has tended to end up a losing proposition over the long term because transaction costs, taxes, and some bad picks tend to wipe out total return. Or so the studies say. Theoretically all any investor has to do is consistently make the correct decision on whether to buy the right stocks and how long to hold them until switching to a new stock or another investment. Based on the performance of most mutual funds over the long term, however, most highly trained and skilled investors aren’t able to perform better than their benchmarks over the long term.

  3. Royce says that “…for most individual investors, trading in and out of stocks over the short term has tended to end up a losing proposition over the long term because transaction costs, taxes, and some bad picks tend to wipe out total return. Or so the studies say…”

    Thats rubbish.

    Those studies pertain to the past.

    Now with transaction costs so low and the cap gains tax rate so attractive, the small investor CAN control his or her destiny.

    Investing IS gambling.

    If you went to the racetrak, would you keep all your money on a horse that breaks its leg midway the race?

    Of course not.

    You scream expletives and shift to a contingency plan.

    The Bottom line: Eat your losses and evade rigid investment philosophies.

  4. royce3333 says:

    Catablast:

    What’s changed since the studies were done is that brokerage commissions are lower for orders larger than about $2,000 and taxes on short term gains are a little lower. I don’t see that changing the results of the studies given the effect of bid/ask spreads, disadvantaged tax treatment for short term gains, and poor investor decision making, but obviously you disagree.

    Analogizing to a horse race is a mistake simply because company’s stock performance doesn’t end like a race does.

  5. Royce — good call.

    But still, my point is that stocks get crippled and at some point we have to “let go.”

    And like a horse race, someone wins – someone loses.

    Even my own family members hold on to “horses” whose prospects for the next 12 months are bleak.

    I say – rotate into something more attractive.

    It’s a zero sum game, Bud Fox.