[Chris Scoreboard Johnston]

Chris Johnston

Good posts on this subject. The most difficult aspect of being a professional trader is that no matter how good you are, you never know when your money will come in. Even my strategies which are proven to get 80% winning trades in terms of accuracy, can at times go a month or two actually losing money. As a result the cash flow at times is screwy. This is the main reason why many good traders manage money and write newsletters, to smooth out the cash flow. I have no great desire to deal with the public in terms of money due to the annoying phone calls about why did we do this or that etc.. as if they knew better. I had one guy who dumped me last year after we went over 6 months without a single losing trade in my bond trading service. I still wonder what his expectation was to this day. However, I do it again to help smooth out cash flow.

Last year, even though I had a 60% gain in most of my accounts for the year, I had one month where I lost over 100k. This as a percentage of my trading accounts is not that big, but it is still alot in gross dollars when bill paying time comes up.

I urge most people if they want to get serious about trading to stay away from the Nintendo stuff ( day trading ). There are many ways to skin the cat, but alot of them were formulated during unbalanced market conditions and as a result, do not work as well most of the time, as they did when they were conceived.

Rseiser, it is hard to model short trading systems that consistently make money. The reason is that there is a huge upward long term bias in the market. It is a better strategy for the average person, to go to cash during bad periods, then re-enter on the long side when conditions are better. I have a few, but it has taken many many years to refine them to the point where they work well. I know you are very bearish about stocks and RE in general, but you can see the problem in the last 6 months with trying to short what you think is a market that should come down in your analysis. You are fighting a huge trend, and that is always tough.

[Chris Scoreboard Johnston]

Chris Johnston

Good posts on this subject. The most difficult aspect of being a professional trader is that no matter how good you are, you never know when your money will come in. Even my strategies which are proven to get 80% winning trades in terms of accuracy, can at times go a month or two actually losing money. As a result the cash flow at times is screwy. This is the main reason why many good traders manage money and write newsletters, to smooth out the cash flow. I have no great desire to deal with the public in terms of money due to the annoying phone calls about why did we do this or that etc.. as if they knew better. I had one guy who dumped me last year after we went over 6 months without a single losing trade in my bond trading service. I still wonder what his expectation was to this day. However, I do it again to help smooth out cash flow.

Last year, even though I had a 60% gain in most of my accounts for the year, I had one month where I lost over 100k. This as a percentage of my trading accounts is not that big, but it is still alot in gross dollars when bill paying time comes up.

I urge most people if they want to get serious about trading to stay away from the Nintendo stuff ( day trading ). There are many ways to skin the cat, but alot of them were formulated during unbalanced market conditions and as a result, do not work as well most of the time, as they did when they were conceived.

Rseiser, it is hard to model short trading systems that consistently make money. The reason is that there is a huge upward long term bias in the market. It is a better strategy for the average person, to go to cash during bad periods, then re-enter on the long side when conditions are better. I have a few, but it has taken many many years to refine them to the point where they work well. I know you are very bearish about stocks and RE in general, but you can see the problem in the last 6 months with trying to short what you think is a market that should come down in your analysis. You are fighting a huge trend, and that is always tough.

[Chris Scoreboard Johnston]

Chris Johnston

I doubt anyone here would accuse me of being evasive. The one thing I think many people in here are guilty of is paralysis of over analysis. Follow RE on a daily basis, when it’s values change over much larger time frames. Also, the dollar, inflation, the budget deficit, China, blah blah blah. How in the world can you ever make any investment decisions with conviction, when you are weighing that many variables at the same time.

Ironically, within this analysis, false inferences are often drawn to markets that do not even fundamentally correlate the way you are viewing them. For example, the budget deficit or the US DOllar have no strong correlation to stock market swings, so why would a report on one of them which is negative, and a subsequent market rally be surprising? They are not correlated fundmentally, so any relationship is essentially random. I know Fund Managers, and they do not sell stocks based on these goofy short term reports, only retail does ( the suckers ).

This issue of inflation and how to protect your assets is often discussed here. There is no perfect hedge in any situation, and this can be proven mathematically. As a result, you cannot put $100 dollars in a bank denominated in a foreign currency, and then borrow against it to buy Soy Milk at Trader Joes, because you think you might be net ahead after doing so due to a valuation play against the dollar.

My suggestion is to make the best investments you think you can and let inflation swings be what they will. Keep in mind if you do this, there will be periods of high and low inflation, where you will have head winds, and tail winds.

The people that assume an extended period of inflation that is longer in duration than what has historically occured, also are guilty of “it’s different this time” analysis which they often criticize with housing experts. Trying to predict the next 1929 is also an excercise in futility. Fight the trend year after year, hoping to finally be right the one time it cracks, is a good road to investment losses.

I have not considered inflation in an investment decision ever, and never will. Maybe I am just too damn stupid to figure it all out, but I need conviction in my decisions, and analyzing 25 or more components does not lead to conviction for me.

[Chris Scoreboard Johnston]

Chris Johnston

I doubt anyone here would accuse me of being evasive. The one thing I think many people in here are guilty of is paralysis of over analysis. Follow RE on a daily basis, when it’s values change over much larger time frames. Also, the dollar, inflation, the budget deficit, China, blah blah blah. How in the world can you ever make any investment decisions with conviction, when you are weighing that many variables at the same time.

Ironically, within this analysis, false inferences are often drawn to markets that do not even fundamentally correlate the way you are viewing them. For example, the budget deficit or the US DOllar have no strong correlation to stock market swings, so why would a report on one of them which is negative, and a subsequent market rally be surprising? They are not correlated fundmentally, so any relationship is essentially random. I know Fund Managers, and they do not sell stocks based on these goofy short term reports, only retail does ( the suckers ).

This issue of inflation and how to protect your assets is often discussed here. There is no perfect hedge in any situation, and this can be proven mathematically. As a result, you cannot put $100 dollars in a bank denominated in a foreign currency, and then borrow against it to buy Soy Milk at Trader Joes, because you think you might be net ahead after doing so due to a valuation play against the dollar.

My suggestion is to make the best investments you think you can and let inflation swings be what they will. Keep in mind if you do this, there will be periods of high and low inflation, where you will have head winds, and tail winds.

The people that assume an extended period of inflation that is longer in duration than what has historically occured, also are guilty of “it’s different this time” analysis which they often criticize with housing experts. Trying to predict the next 1929 is also an excercise in futility. Fight the trend year after year, hoping to finally be right the one time it cracks, is a good road to investment losses.

I have not considered inflation in an investment decision ever, and never will. Maybe I am just too damn stupid to figure it all out, but I need conviction in my decisions, and analyzing 25 or more components does not lead to conviction for me.

[Chris Scoreboard Johnston]

Chris Johnston

This thread is obviously right in my wheelhouse. I have had periods of my trading career where I did alot of day trading, and although during those years I was profitable, it is a very difficult and stressful way to trade. I know many day traders, and a few who make money. However, most of them blow up at some point due to poor risk management. At times I might add to a position that I am holding for a few days if I get a move against it during intra day action. An example of this was yesterday I shorted the S&P and added to it 4 points higher than my original entry. The market ultimately rolled over some and the trade closed profitably. I held it overnight, so it was not a day trade, and exited this morning for a nice profit, which was enhanced by the intra-day add. Keep in mind that I have been trading for 25 years, so I have a little bit of experience doing this type of thing.

I know of no completely mechanical way of day trading that is consistently profitable, and I would be willing to bet that I have studied just about every one that is out there. I am just waiting for the next MIT grad who is a genius that figures out some knew way of curve fitting an oscillator to past data, that ultimately fails in real time action.

Alot of bad habits were created during the late 90’s due to the parabolic upmove that happened, where no matter what you did, it would ultimately come back if you hung on long enough. One of those years I had a 100% accuracy year, meaning that I did not have one single loss the entire year. This was not due to trading brilliance, it was due to a very biased market condition. This ultimately pushed me to go to 100% cash at the beginning of 2000 because I knew something was really wrong if I could make all those trades, many of which were bad trades, and still have them all make a profit. I made much less than many amateurs that year who just swung for the fences, and felt like a damn fool to be honest. However, in the end I had the last laugh and now advise many of these people.

Unfortunately many folks due to this one sided nature of the move, quit their jobs, began trading, and bragged at cocktail parties, but the music eventually stopped and most were cleaned out. They only knew one way to trade, so when the trend changed, they were blown up. I had one friend who made over 2M by owning every perfect internet stock, and knowing nothing about how to trade. I told him to sell out in Jan of 2000, which he did the opposite and bought more, only to lose about 1.8 of the 2M by the time he finally cried uncle.

I agree with 4plex in that nobody would sell an effective system for 3k. I would not sell my bond and S&P systems for a million dollars, as they can make me much more by keeping them to myself. There are so few trading systems that actually work in real time, that I am constantly approached by brokerage firms for a piece of the action with my bond system, which I refuse to give them. The only way I would sell it is if I saw its efficacy diminishing enough where I was not going to use it anymore. Under that circumstance, it would not be worth buying anyway.

The average person should stick to a more medium term horizon, but at the same time do not get sucked into this “were in it for the long term” crap the brokers are selling. Timing the general larger swings can have a huge effect on your overall returns, so it would pay to get some knowledge in this area. Stay away from day trading, we call it NINTENDO due to how similar it is to a video game just clicking away with your mouse.

Sorry for the long post, this is just an area where I feel like I can contribute something of value.

[Chris Scoreboard Johnston]

Chris Johnston

This thread is obviously right in my wheelhouse. I have had periods of my trading career where I did alot of day trading, and although during those years I was profitable, it is a very difficult and stressful way to trade. I know many day traders, and a few who make money. However, most of them blow up at some point due to poor risk management. At times I might add to a position that I am holding for a few days if I get a move against it during intra day action. An example of this was yesterday I shorted the S&P and added to it 4 points higher than my original entry. The market ultimately rolled over some and the trade closed profitably. I held it overnight, so it was not a day trade, and exited this morning for a nice profit, which was enhanced by the intra-day add. Keep in mind that I have been trading for 25 years, so I have a little bit of experience doing this type of thing.

I know of no completely mechanical way of day trading that is consistently profitable, and I would be willing to bet that I have studied just about every one that is out there. I am just waiting for the next MIT grad who is a genius that figures out some knew way of curve fitting an oscillator to past data, that ultimately fails in real time action.

Alot of bad habits were created during the late 90’s due to the parabolic upmove that happened, where no matter what you did, it would ultimately come back if you hung on long enough. One of those years I had a 100% accuracy year, meaning that I did not have one single loss the entire year. This was not due to trading brilliance, it was due to a very biased market condition. This ultimately pushed me to go to 100% cash at the beginning of 2000 because I knew something was really wrong if I could make all those trades, many of which were bad trades, and still have them all make a profit. I made much less than many amateurs that year who just swung for the fences, and felt like a damn fool to be honest. However, in the end I had the last laugh and now advise many of these people.

Unfortunately many folks due to this one sided nature of the move, quit their jobs, began trading, and bragged at cocktail parties, but the music eventually stopped and most were cleaned out. They only knew one way to trade, so when the trend changed, they were blown up. I had one friend who made over 2M by owning every perfect internet stock, and knowing nothing about how to trade. I told him to sell out in Jan of 2000, which he did the opposite and bought more, only to lose about 1.8 of the 2M by the time he finally cried uncle.

I agree with 4plex in that nobody would sell an effective system for 3k. I would not sell my bond and S&P systems for a million dollars, as they can make me much more by keeping them to myself. There are so few trading systems that actually work in real time, that I am constantly approached by brokerage firms for a piece of the action with my bond system, which I refuse to give them. The only way I would sell it is if I saw its efficacy diminishing enough where I was not going to use it anymore. Under that circumstance, it would not be worth buying anyway.

The average person should stick to a more medium term horizon, but at the same time do not get sucked into this “were in it for the long term” crap the brokers are selling. Timing the general larger swings can have a huge effect on your overall returns, so it would pay to get some knowledge in this area. Stay away from day trading, we call it NINTENDO due to how similar it is to a video game just clicking away with your mouse.

Sorry for the long post, this is just an area where I feel like I can contribute something of value.

[Chris Scoreboard Johnston]

Chris Johnston

Flat to down would be my guess, but my time horizons for trading are shorter than what you designated. We have basically gone sideways for several months now. Be sure about your inflation call, because many long term gold holders were killed from the early eighties going forward, when we got into a low inflationary environment.

[Chris Scoreboard Johnston]

Chris Johnston

Flat to down would be my guess, but my time horizons for trading are shorter than what you designated. We have basically gone sideways for several months now. Be sure about your inflation call, because many long term gold holders were killed from the early eighties going forward, when we got into a low inflationary environment.

[Chris Scoreboard Johnston]

Chris Johnston

You should never sell that property, that is a great investment

[Chris Scoreboard Johnston]

Chris Johnston

You should never sell that property, that is a great investment

[Chris Scoreboard Johnston]

Chris Johnston

There is an 18 year cycle in RE, and that is what my first possible low in 2008 comes from. Unlike many here, I am not so arrogantly sure that anything I predict or do is deadly accurate. I am a professional trader, so I need to be flexible. I made 59% in my accounts last year as proven in the trading contest I entered, and that was 100% in the US Markets. If I recall correctly, not many people in here were in agreement with me early last year when I was talking about a big stock market rally. I got pummelled when I suggested it by Poway and Co.

I did say possible low, and late 08 would be about 4 years from the top, so that is in that range you mentioned. Also, going against the mainstream media has made me some substantial money in my life, so I will always want to continue to do that. I doubt there is one person in the mainstream media who could come anywhere near my returns, if they could they would be trading and not writing about how others should do what they cannot themselves.

I have no idea if this or any other theory I have is correct, but I do put money behind my words each day. Further, I have repeatedly urged people not to get so tied up in all these negative things. The US economy will be just fine, and although far from perfect,is in many ways in better shape than it has been in the past. There are always risks Matt, some of my investments do not work out exactly as I plan, but I adapt and take another swing when they don’t. I think many in here need to be a bit more flexible in their views than they are. The asset swing between these two things seems to take place over about a years period, so that could buy an additional year taking us to that 5 year time frame. I do not know if RE will bottom then, or even begin to go up, but it is an upwardly biased asset class, so the surprises will be on the upside not the downside in my opinion. We have certainly seen that in recent years.

I just put about 200k into Caterpillar stock a month ago, how many of the mainstream media would have supported that move, and it is up 13% from my entry point as of today. If we get into a inflationary cycle, there are still plenty of opportunities to make money, and I am hopeful that I will be able to indentify them as I have in the past.

I could be wrong, I very rarely see anyone in here state that. I appreciate the way you disagreed with me instead of attacking, we need more of that in here.

[Chris Scoreboard Johnston]

Chris Johnston

I studied this in detail in 2005 when selling my previous home, and found nothing tangible that an investing system could be constructed from. However, they are the two major places to invest, so it seems logical to me that they are somehow linked. If we factor in the typical mid term congressional election bullish bias in stocks, which is two years, that means the rally should carry into the end of next year. The next possible cycle low I see for RE is 2008, so it could be at that time that we see another swing down in stocks and up in RE as money shifts.

These are broad cycles, this is not contradicting the short term top I am forecasting for stocks at the end of this summer. I think that decline will setup up a nice buy spot this fall, for another stock rally, which could be very powerful, then maybe it gives way to a shift back to RE in late 2008. This is my tentative forecast on this. How far prices fall in RE or stock prices rise in the interim is anyone’s guess. I see no need to flee the US from an investment standpoint.

[Chris Scoreboard Johnston]

Chris Johnston

The Market is always right, if you are not in sync with it, you are the one who is wrong. Paranoid is in agreement with me, and I have also tried often to convince folks of this bull move starting with the mid-term elections.

The trend is up and the commercials are long, stop fighting this. I am trying to remember the last thread that actually had a positive outcome on something discussed. Many here have such a view that everything has to come crashing down, they miss opportunities to make profits.

My favorite quote from another thread is the suckers rally. I am a professional trader, and I can tell you that a 1500 point rally in the DOW is not a suckers rally. I bet you would call a 1500 pt fall a crash, so this must be a real bull market by that same definition.

[Chris Scoreboard Johnston]

Chris Johnston

If that house is truly worth 1.4 by current comps, and you can get it for 1.1 and can afford it you should buy it. Prioes are never going to plummet in an area like that. Manhattan Beach has been soft now for 2 years, so you should be getting a pretty good discount off the peak.

Leave the ego at the door with the timing, that is water under the bridge. You did time the top poorly, so be it. If you can buy this 20% + under the market you should do so because the drop will unlikely be that much anyway basis the median.

I bought a home recently with Adams help, and still cannot believe what I got for the price I paid. There are bargains out there now that may not be there when the overall market is in a more depressed condition. I am familar with this area having lived in El Porto many years ago, and I do agree about your assessment about future availability of homes there.

Best of luck and definitely lets us all know if you pull the trigger.

[Chris Scoreboard Johnston]

Chris Johnston

Seasonal patterns have changed quite a bit in the last 10 years, so looking at things that on average work over the last 30 to 50 is a way to get yourself into big trouble. That data is too heavily skewed to the past.

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