Lendevear's Blog

Re: Lendevear's Blog

Postby kennynah » Mon Jul 07, 2008 6:29 pm

and hence TA comes in handy....no need to ask "why" but just do it based on the TA rules.
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Re: Lendevear's Blog

Postby millionairemind » Mon Jul 07, 2008 7:43 pm

My cutting loss rule is to protect me from myself and the market :)

Y protect against ourselves? It is to protect our egoes from making another mistake of averaging down... Anytime we enter a position, we always have HOPE to make money... when the price goes down... our egoes are hurt... and if we don't admit our mistake, it is going to kill our chance for compounding over the long term.

We can only do so much FA... at times, the market knows more than us and it typically shows up in the charts way before the announcements.

Just be careful about averaging down.. it might work, sometimes...

I know of a fella, (a friend of a friend) who kept averaging down on Yang Zi Jiang. Be very aware of recency bias and other pyschological bias we may have as an investor/trader.

When YZJ dropped from 2.80 to 1.90, he bot alot, thinking that it has already dropped 30%, can't go any lower. When it dropped to $1.60, he bot even more and EVEN MORE at $1.30.

I am not talking about 10 or 20lots more, I am talking about hundreds of lots.

I know he lost around $400K on the YZJ bet.....that is all the profit he made in the last 4 years of bull run.

Just be careful out there.. one wrong step to protect our egoes could land us in the poor house.
"If a speculator is correct half of the time, he is hitting a good average. Even being right 3 or 4 times out of 10 should yield a person a fortune if he has the sense to cut his losses quickly on the ventures where he has been wrong" - Bernard Baruch

Disclaimer - The author may at times own some of the stocks mentioned in this forum. All discussions are NOT to be construed as buy/sell recommendations. Readers are advised to do their own research and analysis.
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Re: Lendevear's Blog

Postby kennynah » Mon Jul 07, 2008 7:46 pm

millionairemind wrote:We can only do so much FA... at times, the market knows more than us and it typically shows up in the charts way before the announcements.



i am in sync with mm on this...and with an addition... the market ALWAYS knows more than us...
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Re: Lendevear's Blog

Postby iam802 » Mon Jul 07, 2008 7:53 pm

MM,

just out of curiousity...

does your friend place all his bets on this one counter?

One thing that I do on top of cut-loss strategy is 'position sizing'.

In simple terms, it means spreading my money into equal parcels across a few counters. For myself, I manage about 5-7 counters. Anything more, I cannot move fast enough.

Whether averaging-down or cut loss strategy, I think it is best to avoid putting everything on a single bet (of course, if the bet is right, the winner will tell a different story) :)
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Re: Lendevear's Blog

Postby kennynah » Mon Jul 07, 2008 7:54 pm

iam802 wrote:Whether averaging-down or cut loss strategy, I think it is best to avoid putting everything on a single bet (of course, if the bet is right, the winner will tell a different story) :)


if right is terrific...it is when things go terribly wrong...and then it's game over...
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Re: Lendevear's Blog

Postby lendevear » Mon Jul 07, 2008 7:57 pm

Interesting replies from everyone on loss cutting! Keep em coming!
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Re: Lendevear's Blog

Postby millionairemind » Mon Jul 07, 2008 7:58 pm

iam802 wrote:MM,

just out of curiousity...

does your friend place all his bets on this one counter?

One thing that I do on top of cut-loss strategy is 'position sizing'.

In simple terms, it means spreading my money into equal parcels across a few counters. For myself, I manage about 5-7 counters. Anything more, I cannot move fast enough.

Whether averaging-down or cut loss strategy, I think it is best to avoid putting everything on a single bet (of course, if the bet is right, the winner will tell a different story) :)


802,

This is actually a friend of a friend A...

From what I heard from this friend A, he is a close friend of Swiber's boss. He made alot of money from Swiber cos' the boss personally told him his shares were undervalued.. back in 2006... and he made good money during the crazy days of Alantac and Jade..

I guess ego got to his head, making him think that he has got the midas touch.

I don't think he started out placing all his bets on YZJ.. just that he keeps averaging down and hence ended in this predicament.

You know how it goes lah... the mind says " How can be so cheap? If it is a good stock at $1.90, it is a even better buy at $1.30 etc..."

mm
"If a speculator is correct half of the time, he is hitting a good average. Even being right 3 or 4 times out of 10 should yield a person a fortune if he has the sense to cut his losses quickly on the ventures where he has been wrong" - Bernard Baruch

Disclaimer - The author may at times own some of the stocks mentioned in this forum. All discussions are NOT to be construed as buy/sell recommendations. Readers are advised to do their own research and analysis.
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Re: Lendevear's Blog

Postby lendevear » Mon Jul 07, 2008 8:05 pm

YZJ has only about a year of listed history. We have no ideas on corporate governance, dividend payout history/ratio and other historical information. If your friend want to dollar cost average, he can do so on strong blue chips, not kucheng kurak component stocks. It just takes a bear market to wipe off everything. And its only the beginning.
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