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Chris Johnston
ParticipantChris Johnston
iamafuturestrader.comI agree the topic is tired at this point. You ignore the facts that do not fit your side such as the rallies in the recessionary years. There is not one 20% number in over a hundred numbers anywhere on the first page of the newsletter, I am looking at it right now.
Please do not misquote me in a public forum like this.
To answer your question about a recession being possible, absolutely it is. Also, could the market rally fail to materialize, absolutely. I outlined the conditions in the newsletter that would invalidate the setup. It is unfair of you not to mention these things that I have written that you have seen but others here have not without having them in the proper context.
I have just said there is likely to be a stock rally. I have said it itleast 50 times in here, I COULD BE WRONG. I am not sure that I have ever seen you type those words. Knowone knows the future. I could care less if there is a recession or not. That link is one that you drew. It is not part of my consideration to buy or sell stocks.
You will learn through time going forward that stocks can and have at times rallied during recessionary periods. This is a historical fact, it has happened in the past and will again during some down periods. These absolutes you draw are often not completely accurate.
You need to tighten some of these things up for your consulting because they are known by people with experience and you do not want your credibility undermined. It is ok to have strong opinions, but they need to be backed by the numbers. Absolutes are out there in some areas, but relationships that have had variations should not be presented as absolutes.
ParticipantChris Johnston
iamafuturestrader.comYes I do consider him inflexible. He runs a bear only fund, short only. How is that a fully flexible market view. He never goes long, why would you ever expect him to call for a rally?
ParticipantChris Johnston
iamafuturestrader.comSaying it will be dark is a fact, an event that has repeated with 100% regularity over a immense sample size. Predicting something that may or may not happen in the future is an opinion with a sample size of zero going on 1. Opinions including mine are far from facts. I cannot stress enought PW that you need to have some flexibility in your thinking.
I have no idea if you will be right or wrong about any of your strong predictions. I do know this, some of mine will be wrong, and I will adapt on the spot to the ones that are. Will you be able to?
I find it hard to believe that you would equate darkness of the night with an economic prediction from an economist. Also, where have I stated that I expect a 20% gain in the indices? I have no idea how much this rally will be once it starts, if it starts in the fall. My goal once I enter my trade will be to outperform the indices as a whole, which I have done every year since I have been trading stocks.
The last year as I stated the stocks I bought and held gained 19.2% from entry to exit as a whole. That included the small dividends that were paid on them during the hold period which was about 7 months. CAT, HPQ, HON, AA and HD were the 5 stocks that I bought, putting 20% of my money in the trade in each one.
That beat the indices for the year by a wide margin, which was my goal. It was certainly no home run by any means. I do expect this year for the trade to do better if it sets up properly in the fall.
ParticipantChris Johnston
iamafuturestrader.comMy whole point with this entry is that do not be in too much of a rush to short something based on a fundamental reason. You can be right on fundamentals and take alot of heat on a trade. This is why you have to have a good bar pattern on top of the fundamentals. When trading bear flags or bull flags from my experience it is wise to look for symmetry in them. Look at the last one and how much it pulled back against the trend, then wait for a similar bounce which in this case was about $2/share. Today had a good sized move down so just wait until you get about a $2 bounce off the low. This is just a general rule for novices and not how I would enter the trade. The point is location in terms of price on your entry is important.
There is no reason that just because an individual or institution determines that a stock is a good short, that it will just cascade downward the minute you are in. The market could care less who or who is not in. Choose your points with discipline and do not fall in love with your idea. If it goes against you x amount get out and admit you were wrong.
In general trading flag patterns does provide an edge and you should be able to hit over 50% of them. One rule I used to use with them is that once 3 occurred I pass on the ensuing ones, because all trends come to an end. Three continuation patterns on average is what I used to see before they start to shake the tree a bit. ( This means come after the weak hands ) Just look at Jan 06 in this stock, you had three consolidations leading up to that, then they shook the tree a bit for awhile getting all the weaklings out before moving up again.
There is no need to fear unlimited losses in shorts, I have stated this in this forum over and over. In a highly liquid stock you will be filled at your stop probably with just a few cents slippage. Set your stops and ALWAYS honor them.
RS – I told you when we talked at the get together that you were playing with fire on the short sale exits you were doing.
ParticipantChris Johnston
iamafuturestrader.comFormer – I knew you were tongue in cheek, the comment was just targeted at this thread in general. It is so hard to predict what will happen, but I do think people get too carried away with negative thoughts at times. It is much easier to scare people for some reason that it is to prop them up with optimism.
PW – if that lag is true then the recession you are looking for is a long ways away if my stock model is correct. We should peak spring to summer of next year, so 9 months after that I guess by what you are saying takes us into 2008.
As I always say, I could be wrong, but I wonder if Roubini risks 7 figures on what he writes like I do? I bet he risks zero. I do find his writing compelling but like alot of the doom and gloomers, I think he carries out some things too far. How often are these doom and gloom predictions accurate? Ask Bob Prechter, or what about Bill Gross and his 5000 DOW call a few years back.
Maybe at the end of the day I just cannot live my life thinking the sky is about to fall on me. This may cloud my judgement in viewing these very negative economic forecasts.
ParticipantChris Johnston
iamafuturestrader.comI hate to rain on the parade of gloom and doom, but we are not going down anywhere near that far folks.
ParticipantChris Johnston
iamafuturestrader.comJG – I asked him if he had done any regression analysis and he told he that he had considered it but did not have to time to do it. I was mostly interested in how many std dev’s some of these things in his model were from a regression line.
ParticipantChris Johnston
iamafuturestrader.comI begin by stating that everyone has the right to thier opinion, but here is my rebuttal to this.
The answers to the question about selling those secrets is yes they would. I have given some very valuable pieces of information out here about trading only to be challenged and mimicked about a few of them. Ironically, this is the exact reaction I expected and was somewhat of a trial balloon for me. I am now much less worried about revealing things. The reason for this is in the spirit of your message, most people will not follow it anyway because they think they know better.
This model is absolutely terriffic, it filters out alot of noise. Another reason people sell things like this is to “fill in the periods of underperformance in their method.” Systematic approaches to anything still have periods of under performance, and cash flows from other sources help smooth out the monthly income. It is the only reason I offer my services, because on balance it is very time consuming and frustrating to deal with the public in general.
I used a modified version of his model to time selling my property in Newport Beach at the exact high of the market. I have clients that pay me for access to timing trading signals that work, and yet some of them do not follow all of them. They hand pick some and disregard others, then call and ask questions.
You would be surprised at the questions I get some times, when the answers are always, just follow the system. People in general have to tinker with everything, so there is not in reality great risk of an edge being diminished by revealing it, sad but true.
It is human nature to be undisciplined and that greatly reduces the risk of revealing a great secret about something. I have done the research on each of the five categories and confirmed that they are in fact signinficant leading indicators of price. He also mentions interest rates as being alot less important than many other things, and this matches my research exactly. This was a surprising discovery when I found it 2 yrs ago. Ignore it if you wish, but it just gives me that much more of an edge over you when the next buy cycle comes up.
His book makes no such claim about being the ticket to riches, you must not have read the book. All it gives is a mechanical model to buying and selling. Most people would be much better served with rule based decsion making than all of these aribtrary things they come up with that they use to make decisions.
The only negative with Robert is that he is a little hyper, and that he has close relationships with the Anderson guys at UCLA. However, he is much more bearish than they are. He had a seminar this year with several great speakers one of whom specializes in PAT (Private Annuity Trust) transactions.
I guess if I have typos that will diminish my credibility in my post, so I hope I do not have any.
ParticipantChris Johnston
iamafuturestrader.comI think they will do nothing, and when it hits the fan the political grandstanding for reform will be in this area. They will claim they had no real idea of the depth of the problem, and now they have identified it and fixed it. They will pick out a couple of high profile companies and execs and bring charges on them just like they did with equities.
A few will go to jail, many will be fined. Then we will move on after all the political points have been tallied. Most of the “reforms” they have done in the financial markets are complete window dressing and have really accomplished nothing. A prime example was blaming the buy and sell programs for stock crashes, they had nothing to do with it. However, the average person was sold this bill of goods and felt better when something was “done” about it.
ParticipantChris Johnston
iamafuturestrader.comI have a close friend who runs a fund that does exactly what you are discussing, and I have no money in it despite his stellar track record. A rising tide lifts all the boats and a receding tide lowers them. The up cycle in RE is over for now, it is too late, the easy money has been made. I for one think it is time to have money elsewhere for a few years. RE’s time will come again in the future. Chasing RE in places that have not risen much is like buying stocks in 2000 that had not dropped as much as the biggies, ultimately they all got dragged down.
This asset class is not the best place to have $$ right now, it is really that simple to me. Sorry for the bluntness. I would not risk tying up money in Austin, TX for example, in an illiquid asset just so that I could make 5% per year in it if everything goes great. You need the perfect storm for a T-Bill rate of return, and it makes no sense to me.
Just my opinion – no interest and I have a prime easy way into this arena (mortgages) if I wanted in.
ParticipantChris Johnston
iamafuturestrader.comPW – the examples of that are right in front of you. All of the homebuilders have rising 12 month EPS, they have dropped in disounting of a future drop. I have emailed you charts that show this.There might be an exception or two, but most homebuilders and lenders have rising 12 month EPS as we speak. I know you claim their earnings are dropping, but they are not yet on a 12 month basis, which means alot more than just one report.
This is a known fact on wall street, so no sense debating this. The post by the gentleman earlier I think must have been just his opinion, the numbers do not back him. You can always point out exceptions to anything, but the example you state supports our point. They announced slower sales which lead to anticipation of lower earnings that have not been reported yet.
ParticipantChris Johnston
iamafuturestrader.comDave,
We agree here, stock prices are unquestionably leading indicators not lagging. I have been telling clients that recently. They fall on reports when forward guidance is poor due to this relationship. That is not to say that a terrible current earnings report could not tank a stock, but the forward comments are more typically the moving force.
ParticipantChris Johnston
iamafuturestrader.comI feel compelled to chime in here aside from not getting pre-approval from my nemesis anx. The mixed comments about this WAMU short discussion from dave makes me curious as to exactly what you do dave. If you are truly an experienced trader you would know that when the majority of the wall street analysts are on one side of something, that is a very nice opportunity to do the opposite. This is why people analyze sentiment indicators, to fade them. This is a component of my trading system for entries. Kevin Haggerty, Larry Williams, Paul Tudor Jones ( the one of these three that I do not know personally ) to name a few thrive on doing exactly that. With all of your experience you have to know this. Those who support analysts are normally shills for the brokerage firms.
We also know that the majority of mutual funds do not beat the S&P 500, and this has been the case for years on end. So to claim that the analysts are not recommending something is absolutely no reason at all to do or not to do it. History shows quite clearly most of them were bullish on internet stocks in 2000, and some have actually gone to jail due to conflicts of interest.
There is no reason to study a stock for months upon end before taking a position, that is absolutely the last thing I would ever do. That opens the door to far too many subjective evaluations of different pieces of information. Maybe you are capable of doing it, but the average person cannot get caught up in “the story.” There is far too much BS in it, and why many execs get themselves into trouble. Further, there are very intelligent people in this blog, and there is no reason that they have to hand there money over to a professional just for the sake of doing it. I talked personally with a few at our get together and their knowledge of trading stocks was impressive.
Keeping things simple is what the majority of great traders that I know would tell the average person to do in making their decisions. If most analysts were capable of being traders they would be, the pay is much higher. Many of them would not even know how to place an order to buy or to short. You have to know this so that leads me to the question of what exactly is the point of your input here?
I do agree that shorting this stock right here is not something I would do. However, there is a solid downtrend in place, and the last 12 months earnings are declining so shorting a pullback in this stock of a 10 day high or so would be a reasonable short term trade to make. I would not chase it right here due to it being pretty far extended downward already.
ParticipantChris Johnston
iamafuturestrader.comI have debated how to respond to you anx. There are a couple of things we can do. I think it might be good for us to meet face to face and work out our differences. However, I am sure you are a coward, so that probably will not work. You have no real interest in what you ask for anyway, you are simply trying to get my goat.
I make no representation good bad or otherwise about anything I say. If you choose to believe what I say or not that is your right. If it is the consensus in here that I stop posting market related comments I will.
You have no right to any personal account statements at all unless you are a prospective client whose money I would manage. I would never take you as a client so that is off the board.
I responded to an earlier inquiry by you along these same lines and you did not respond. Therefore, you have obviously decided just to take shots at me. Unfortunately, when you go public like I have you open yourself up to these types of things. There is always a wise guy who due to his own inadequacies will take shots at others. So be it.
I am done responding to any of your comments, so do not bother posting them. If you are interested in the face to face, email me.
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