The price of a company’s stock is all about expectations. In contrast, economics is about returns. I like to talk about both. Call me a geek I trade mostly through automation that looks only at trends (expectations). However, I prefer to trade stocks that also have good returns so that overall all can win - including me. Trading stocks that do not have good economic value is a “straight-up” win-lose situation. I find that ethically hard to stomach. Trading trends of stocks that are creating value is a win-win (even though I win more by playing the trends). Many times I have walked from trading a company that has got the value part wrong – even though for a while longer it may trend well. Sometimes when the trend part of the equation is unclear, I will also bail. When I don’t think I know what I’m doing, it’s time to stop. Reflection on ten years of trying to perfect automation (now profoundly working), I see the above ethics of trading as the most valued lesson. At this moment, the US is facing a deliberate default of its debt. I don’t know what will happen. So, typically it is time to avoid the situation. However, Prosfer automation got me into a short play with a healthy cushion. So, opportunity risk is all that I lose if I continue to hold short and it turns out to be wrong. I believe it is true that there are members of the US congress that are anarchists and really do want to shut down the US government and force it to default (needlessly) on its debt. They don’t consider the harm to the US government, or even the world. I don’t like such people. I wish the US government well. If one does not know what is happening, be willing to consider sitting away from the action. Opportunity costs are regrettable. Being wrong in such situations can be catastrophic.
Posted on: Sat, 28 Sep 2013 17:24:20 +0000
Trending Topics
Recently Viewed Topics
© 2015