Quote:
Originally Posted by Slava
Haha, so on one hand you're talking about trading on 30 seconds of info or "maybe even overnight" and then you try to say this isn't speculative? I'm in stitches!
I don't know what kind of information you use to define an investment, but "maybe even overnight" isn't an investment period. I don't know what you're up to, but it's hard to consider that investing.
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I get that. And CP investors are very good by all accounts. But it's a mutual laugh. On one hand, "I have no idea what you do". And on the other, "but it's sure isn't investing".
I also find it funny that chances are not a single "investor" here can answer a single question that quantifies their investment. I get the feeling "investors" buy a stock because "they think it will go up". And I do not think they know when they have failed other than to hold onto it forever and let the market and diversification smooth it out.
Ironically, that is not investing. Ironically that is hope, prayer, gambling by its definition. I know it works for some people but it works because the markets work.
What I do is easy. Chart patterns repeat themselves. They always have. It's been proven. It's just human psychology. If Jesus sold fish I could tell you exactly when Judas shorted his fish stock and began the inevitable fish market crashed 2000 years ago.
Most market beating trends start with statistically significant abnormal action from very low volatility....nothing going on for months and then some change in fundamentals that causes people to pile in. I haven't looked at the top 500 gainers this year but I know 70-80% of them will fit that bill. It starts with a big day, pulls back due to profit taking. Then either fails and returns to a trend line or continues higher for bigger gains. Sometimes you catch the big day. Sometimes you catch the pull back for longer holds. But it's just psychology and it happens over and over. It's quantifiable, testable and repeatable. It happens on 30 second charts. It happens on ten year monthly charts.
At any rate, defining an investment by the duration of time you have your money involved is silly. Being in cash every night is wildly less risky than holding over night. Stocks rarely tank during the trading day. News happens generally after hours and you wake up with a 30% haircut. So time is just a bizarre metric for investment vs speculation. Time is required to reap the benefits of diversification. But that also makes the gainers less valuable. It just removes alpha and to beat the market requires alpha.
Going back to the poster with the question, how do I invest, I don't think it matters what method you use. What does matter is creating a strategy you can rely on. Buying based on a management team might be a fantastic strategy. But how do I search out the companies with the best teams? What is the criteria? How do I know they are better than the others? And most importantly, when have I been proven wrong? Once those have been answered with a statistically significant number of subjects in your study, at that point you have stopped speculating. The average Joe with average information needs this data or you just become more chum for people with better information.