Posts filed under “Trading”

New Column up at Real Money (03/03/06)

RealmoneyMy latest Real Money column, "Enjoy the Rally but Cull the Herd" is posted (sub only). It is based on this weeks admonition to Get Darwinian on Your Portfolio!   

I also speak to several technicians and portfolio managers, discussing what they are culling.   

Here’s an excerpt:

Despite the negative economic future, with all these positives and the indices near new highs, why have any concerns beyond the near term?

The answer lies between the long and short term. Over the intermediate term, there are numerous technical warning signs. I use these signals to help alert me to a possible change in trend or character of the markets. Investors ignore these signals at their own peril.

That all said, investors want to participate in this current action, especially since they know that the last leg up in a bull market is often the most profitable. Recall that from October 1999 to March 2000, the Nasdaq doubled. But there is good reason to be concerned too.

Short-term bullish, longer-term bearish, intermediate-term confused. What’s an investor to do?

Cull the herd.

The most amusing thing about this is the reaction it generates. The Bulls are convinced I’ve joined them, the perma bears think I’m a sellout. Anyone who’s been reading me long enough knows this is the same old sameold I’ve been yakking about for a year. I just keep edging the top date forward until I get the red market signal that its time to short.


Enjoy the Rally but Cull the Herd
3/3/2006 3:08 PM EST

Category: Trading

Why the Short Term Upside Bias?

Category: Investing, Technical Analysis, Trading

The Backward Business of Short Selling

If you haven’t already, I strongly admonish you to go read Jesse Eisinger’s column today:

It’s a Tough Job, So Why Do They Do It?  The Backward Business of Short Selling

Here’s the money quote:

"The shorting life is nasty and brutish. It’s a wonder anyone does
it at all.

Shorts make a bet that a stock will sink, and nobody else wants
that: Not company executives, employees, investment banks nor most investors.
That’s why most manipulation is on the other side; fewer people object when
share prices are being pumped up. For most on Wall Street, the debate is whether
shorts are anti-American or merely un-American.

Yet in all the paranoia about evil short-sellers badmouthing
companies, what is lost is how agonizingly difficult their business is. They
borrow stock and sell it, hoping to replace the borrowed shares with cheaper
ones bought later so they can pocket the price difference as profit. It’s a
chronologically backward version of the typical long trade: sell high and then
buy low."

Go forth and read . . .



It’s a Tough Job, So Why Do They Do It?
The Backward Business of Short

Jesse Eisinger
WSJ, March 1, 2006; Page C1


UPDATE March 2, 2006 10:32am: 

See below for more text


Read More

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