|
|  |
Web of Finance
159 hits
| Jun 02, 2002 4:17 am |
|
re: The 7 Disciplines of StockBottom.com - The Bottom Line |
Keith Butler
 | |
Great Post Guan, This has been one of the most frustrating markets I can ever recall: As a rule you never want to short a dull market, and it's tough to go long when you dont know what the next terrorist rumor will be.
Does this scenario sound familiar: You see a breakout, it sets off a buy signal, and you jump in. But the stock just sits there and goes nowhere while its newfound strength slowly ebbs away. After a while, it rolls over from its own weight and triggers your stop loss. To add insult to injury, the stock then magically recovers without you and moves higher. But the most important thing is to stay disciplined, and quantify your risk on every trade.
One thing that has been working somewhat for me lately are the liquid defense plays: ie; RTN,ATK, and my favorite LLL. The biggest threat to the market these days is terririst attacks, war threats etc and these plays should keep you insulated from those threats, in fact they should rise. On top of that, unlike technology/telecom, the new U.S.Defense budget is the largest pile of money on earth and it's going to get spent. If you listen to the talking heads on CNBC they'll tell ya that the defense plays are overvalued at 25 and 30 times earnings, and to an extent they're right. BUT remember who's buying these names.... The Momentum investors.... and as thair name implies they don't care about valuations, they care about momentum. If you'll recall the last group that the momentum hawks bought was dot.bombs and telecom who had absurd valuations of say 500 times earnings. So comparitavely, buying a stock with a multiple of 30 seems like a bargain to them. Besides, they just rent the stock for a short while anyway.
Private Reply to Keith Butler (new win) |
|
