[stockstradr]

I agree with peterb.

However, sunny88, a bottom-biased form of dollar-cost-averaging can be used effectively like a shotgun to shoot at an anticipated bottoming of stock or commodity. And I certainly DO NOT agree that we never have even a rough idea of where the bottom we be reached on stock or commodity.

Let me provide an example. Consider OIL.

I had a gut instinct a couple months ago that oil would drop to roughly $30/bbl. Now I was going on instinct. However, there were also some very experienced oil analysts were also expressing that opinion, so that helped my confidence.

Now as it turns out I made good money on that trade, but I wouldn’t have made one thin dime had I waited for $30/bbl before buying my double-long crude oil ETF’s. $30/bbl never came.

Instead, I used a bottom-searching method of dollar cost averaging, where I started buying significantly BEFORE values reached my anticipated bottoming price. When oil first slid to $37/bbl earlier in Dec, I started my dollar-cost-averaging on the crude oil ETF’s, like “UCO.”

But then oil dipped to $33/bbl, and I added to my position in the crude oil ETF’s. On either side of Christmas they really hit bottom and I was buying.

“UCO” then went from $10/share at Christmas, up to $18/share on Jan06, for a net appreciation of about 80% in one week. It was the attack on Gaza by Israel that really sent oil back up to $50.

DISCLOSURE: I made two mistakes on that trade that limited my profit:
1) I only bet about 3% of portfolio. I should have gone with maybe 5% or 10% once oil reached $33 (extremely oversold).
2) I ended up selling “UCO” at about $13, which was WAY to early. My actual average net gain was about 15%. I should have used a trailing stop loss order and let UCO run all the way up to $18.50 and stop out at about 17.50.

Anyway, sometimes it works to use a “shotgun” approach to hitting the bottom. When our investment target starts to get near our anticipated bottoming price, we start our bottom-seeking dollar-cost-averaging, and we INCREASE our buys as the investment price nears our target, to lower our average share price.

Of course, one must use PRUDENT RISK CONTROL when using any method involving increasing our bets when an investment is moving further out-of-the-money. You don’t want to lose all your money in case when you are WRONG on where the bottom is.

NOTE: I presently own no oil investments of any kind at the moment. I believe OIL will continue to go lower, oil futures curve will continue to flatten into lower prices. I’m now guessing $25/bbl,even $20/bbl within 2009 year.

When “UCO” gets to $9, and hopefully even $7, then I will be LOADING UP on both the double-long crude oil ETF’s and also the big oil stocks like XOM.

NOTE: nobody in their right mind would bet more than 5% or 10% of an entire portfolio on an extremely risky bet like a double-long or double-short crude oil ETF. I certainly do not wager more than 10% of my portfolio on such bets.

[stockstradr]

I agree with peterb.

However, sunny88, a bottom-biased form of dollar-cost-averaging can be used effectively like a shotgun to shoot at an anticipated bottoming of stock or commodity. And I certainly DO NOT agree that we never have even a rough idea of where the bottom we be reached on stock or commodity.

Let me provide an example. Consider OIL.

I had a gut instinct a couple months ago that oil would drop to roughly $30/bbl. Now I was going on instinct. However, there were also some very experienced oil analysts were also expressing that opinion, so that helped my confidence.

Now as it turns out I made good money on that trade, but I wouldn’t have made one thin dime had I waited for $30/bbl before buying my double-long crude oil ETF’s. $30/bbl never came.

Instead, I used a bottom-searching method of dollar cost averaging, where I started buying significantly BEFORE values reached my anticipated bottoming price. When oil first slid to $37/bbl earlier in Dec, I started my dollar-cost-averaging on the crude oil ETF’s, like “UCO.”

But then oil dipped to $33/bbl, and I added to my position in the crude oil ETF’s. On either side of Christmas they really hit bottom and I was buying.

“UCO” then went from $10/share at Christmas, up to $18/share on Jan06, for a net appreciation of about 80% in one week. It was the attack on Gaza by Israel that really sent oil back up to $50.

DISCLOSURE: I made two mistakes on that trade that limited my profit:
1) I only bet about 3% of portfolio. I should have gone with maybe 5% or 10% once oil reached $33 (extremely oversold).
2) I ended up selling “UCO” at about $13, which was WAY to early. My actual average net gain was about 15%. I should have used a trailing stop loss order and let UCO run all the way up to $18.50 and stop out at about 17.50.

Anyway, sometimes it works to use a “shotgun” approach to hitting the bottom. When our investment target starts to get near our anticipated bottoming price, we start our bottom-seeking dollar-cost-averaging, and we INCREASE our buys as the investment price nears our target, to lower our average share price.

Of course, one must use PRUDENT RISK CONTROL when using any method involving increasing our bets when an investment is moving further out-of-the-money. You don’t want to lose all your money in case when you are WRONG on where the bottom is.

NOTE: I presently own no oil investments of any kind at the moment. I believe OIL will continue to go lower, oil futures curve will continue to flatten into lower prices. I’m now guessing $25/bbl,even $20/bbl within 2009 year.

When “UCO” gets to $9, and hopefully even $7, then I will be LOADING UP on both the double-long crude oil ETF’s and also the big oil stocks like XOM.

NOTE: nobody in their right mind would bet more than 5% or 10% of an entire portfolio on an extremely risky bet like a double-long or double-short crude oil ETF. I certainly do not wager more than 10% of my portfolio on such bets.

[stockstradr]

I agree with peterb.

However, sunny88, a bottom-biased form of dollar-cost-averaging can be used effectively like a shotgun to shoot at an anticipated bottoming of stock or commodity. And I certainly DO NOT agree that we never have even a rough idea of where the bottom we be reached on stock or commodity.

Let me provide an example. Consider OIL.

I had a gut instinct a couple months ago that oil would drop to roughly $30/bbl. Now I was going on instinct. However, there were also some very experienced oil analysts were also expressing that opinion, so that helped my confidence.

Now as it turns out I made good money on that trade, but I wouldn’t have made one thin dime had I waited for $30/bbl before buying my double-long crude oil ETF’s. $30/bbl never came.

Instead, I used a bottom-searching method of dollar cost averaging, where I started buying significantly BEFORE values reached my anticipated bottoming price. When oil first slid to $37/bbl earlier in Dec, I started my dollar-cost-averaging on the crude oil ETF’s, like “UCO.”

But then oil dipped to $33/bbl, and I added to my position in the crude oil ETF’s. On either side of Christmas they really hit bottom and I was buying.

“UCO” then went from $10/share at Christmas, up to $18/share on Jan06, for a net appreciation of about 80% in one week. It was the attack on Gaza by Israel that really sent oil back up to $50.

DISCLOSURE: I made two mistakes on that trade that limited my profit:
1) I only bet about 3% of portfolio. I should have gone with maybe 5% or 10% once oil reached $33 (extremely oversold).
2) I ended up selling “UCO” at about $13, which was WAY to early. My actual average net gain was about 15%. I should have used a trailing stop loss order and let UCO run all the way up to $18.50 and stop out at about 17.50.

Anyway, sometimes it works to use a “shotgun” approach to hitting the bottom. When our investment target starts to get near our anticipated bottoming price, we start our bottom-seeking dollar-cost-averaging, and we INCREASE our buys as the investment price nears our target, to lower our average share price.

Of course, one must use PRUDENT RISK CONTROL when using any method involving increasing our bets when an investment is moving further out-of-the-money. You don’t want to lose all your money in case when you are WRONG on where the bottom is.

NOTE: I presently own no oil investments of any kind at the moment. I believe OIL will continue to go lower, oil futures curve will continue to flatten into lower prices. I’m now guessing $25/bbl,even $20/bbl within 2009 year.

When “UCO” gets to $9, and hopefully even $7, then I will be LOADING UP on both the double-long crude oil ETF’s and also the big oil stocks like XOM.

NOTE: nobody in their right mind would bet more than 5% or 10% of an entire portfolio on an extremely risky bet like a double-long or double-short crude oil ETF. I certainly do not wager more than 10% of my portfolio on such bets.

[stockstradr]

While I’m a huge Soros fan, I try to keep it in perspective. I read and archive his interviews and statements on market picks then I evaluate his performance.

It appears that the legendary Soros has lost some of his edge for accurate market picks, as reflected in his hedge fund performance. He keeps making mistakes. He hits only a few home runs.

Maybe he is distracted by all his philanthropic activities, I don’t know.

I draw your attention to the bottom of this article, where Soros gives an unusually candid retrospective on his hedge fund performance.

http://www.ft.com/cms/s/0/09b68a14-eda7-11dd-bd60-0000779fd2ac.html

[stockstradr]

While I’m a huge Soros fan, I try to keep it in perspective. I read and archive his interviews and statements on market picks then I evaluate his performance.

It appears that the legendary Soros has lost some of his edge for accurate market picks, as reflected in his hedge fund performance. He keeps making mistakes. He hits only a few home runs.

Maybe he is distracted by all his philanthropic activities, I don’t know.

I draw your attention to the bottom of this article, where Soros gives an unusually candid retrospective on his hedge fund performance.

http://www.ft.com/cms/s/0/09b68a14-eda7-11dd-bd60-0000779fd2ac.html

[stockstradr]

While I’m a huge Soros fan, I try to keep it in perspective. I read and archive his interviews and statements on market picks then I evaluate his performance.

It appears that the legendary Soros has lost some of his edge for accurate market picks, as reflected in his hedge fund performance. He keeps making mistakes. He hits only a few home runs.

Maybe he is distracted by all his philanthropic activities, I don’t know.

I draw your attention to the bottom of this article, where Soros gives an unusually candid retrospective on his hedge fund performance.

http://www.ft.com/cms/s/0/09b68a14-eda7-11dd-bd60-0000779fd2ac.html

[stockstradr]

While I’m a huge Soros fan, I try to keep it in perspective. I read and archive his interviews and statements on market picks then I evaluate his performance.

It appears that the legendary Soros has lost some of his edge for accurate market picks, as reflected in his hedge fund performance. He keeps making mistakes. He hits only a few home runs.

Maybe he is distracted by all his philanthropic activities, I don’t know.

I draw your attention to the bottom of this article, where Soros gives an unusually candid retrospective on his hedge fund performance.

http://www.ft.com/cms/s/0/09b68a14-eda7-11dd-bd60-0000779fd2ac.html

[stockstradr]

While I’m a huge Soros fan, I try to keep it in perspective. I read and archive his interviews and statements on market picks then I evaluate his performance.

It appears that the legendary Soros has lost some of his edge for accurate market picks, as reflected in his hedge fund performance. He keeps making mistakes. He hits only a few home runs.

Maybe he is distracted by all his philanthropic activities, I don’t know.

I draw your attention to the bottom of this article, where Soros gives an unusually candid retrospective on his hedge fund performance.

http://www.ft.com/cms/s/0/09b68a14-eda7-11dd-bd60-0000779fd2ac.html

[stockstradr]

OK, I’ll take the bait and reply…

I will admit that shorting long-bonds now that yields have climbed up this much, is questionable, risky, and may lose yah your money.

I agree it is just too difficult to predict how the competing forces will play out, what with the Fed threatening to buy down the long end of the curve, vs. the Big Money (corporate and investment banking) dumping the long-bonds and buying the corporate paper…plus eventually the Really Big Money foreign reserves (China, Japan, Oil-producing nations) that have been buying our debt will turn their back (driving up the yields to ridiculous levels)

Plus even if the Fed doesn’t buy down the curve to drive money to corporate paper and mortgages, the Fed may still do same for separate reason to force borrowing through buying treasuries on our behalf and forcing that money down our throats.

Yet, don’t forget Fed has to auction over two trillion this year, so one could argue the money required to buy down the yield against that massive auction would compromise the Fed’s balance sheet (beyond the ridiculous levels of money printing already reached)

I’m on the side now. I am of opinion that this recession/depression will eventually give us really low yields at auction again, and THAT will then be another good opportunity to go short again.

[stockstradr]

OK, I’ll take the bait and reply…

I will admit that shorting long-bonds now that yields have climbed up this much, is questionable, risky, and may lose yah your money.

I agree it is just too difficult to predict how the competing forces will play out, what with the Fed threatening to buy down the long end of the curve, vs. the Big Money (corporate and investment banking) dumping the long-bonds and buying the corporate paper…plus eventually the Really Big Money foreign reserves (China, Japan, Oil-producing nations) that have been buying our debt will turn their back (driving up the yields to ridiculous levels)

Plus even if the Fed doesn’t buy down the curve to drive money to corporate paper and mortgages, the Fed may still do same for separate reason to force borrowing through buying treasuries on our behalf and forcing that money down our throats.

Yet, don’t forget Fed has to auction over two trillion this year, so one could argue the money required to buy down the yield against that massive auction would compromise the Fed’s balance sheet (beyond the ridiculous levels of money printing already reached)

I’m on the side now. I am of opinion that this recession/depression will eventually give us really low yields at auction again, and THAT will then be another good opportunity to go short again.

[stockstradr]

OK, I’ll take the bait and reply…

I will admit that shorting long-bonds now that yields have climbed up this much, is questionable, risky, and may lose yah your money.

I agree it is just too difficult to predict how the competing forces will play out, what with the Fed threatening to buy down the long end of the curve, vs. the Big Money (corporate and investment banking) dumping the long-bonds and buying the corporate paper…plus eventually the Really Big Money foreign reserves (China, Japan, Oil-producing nations) that have been buying our debt will turn their back (driving up the yields to ridiculous levels)

Plus even if the Fed doesn’t buy down the curve to drive money to corporate paper and mortgages, the Fed may still do same for separate reason to force borrowing through buying treasuries on our behalf and forcing that money down our throats.

Yet, don’t forget Fed has to auction over two trillion this year, so one could argue the money required to buy down the yield against that massive auction would compromise the Fed’s balance sheet (beyond the ridiculous levels of money printing already reached)

I’m on the side now. I am of opinion that this recession/depression will eventually give us really low yields at auction again, and THAT will then be another good opportunity to go short again.

[stockstradr]

OK, I’ll take the bait and reply…

I will admit that shorting long-bonds now that yields have climbed up this much, is questionable, risky, and may lose yah your money.

I agree it is just too difficult to predict how the competing forces will play out, what with the Fed threatening to buy down the long end of the curve, vs. the Big Money (corporate and investment banking) dumping the long-bonds and buying the corporate paper…plus eventually the Really Big Money foreign reserves (China, Japan, Oil-producing nations) that have been buying our debt will turn their back (driving up the yields to ridiculous levels)

Plus even if the Fed doesn’t buy down the curve to drive money to corporate paper and mortgages, the Fed may still do same for separate reason to force borrowing through buying treasuries on our behalf and forcing that money down our throats.

Yet, don’t forget Fed has to auction over two trillion this year, so one could argue the money required to buy down the yield against that massive auction would compromise the Fed’s balance sheet (beyond the ridiculous levels of money printing already reached)

I’m on the side now. I am of opinion that this recession/depression will eventually give us really low yields at auction again, and THAT will then be another good opportunity to go short again.

[stockstradr]

OK, I’ll take the bait and reply…

I will admit that shorting long-bonds now that yields have climbed up this much, is questionable, risky, and may lose yah your money.

I agree it is just too difficult to predict how the competing forces will play out, what with the Fed threatening to buy down the long end of the curve, vs. the Big Money (corporate and investment banking) dumping the long-bonds and buying the corporate paper…plus eventually the Really Big Money foreign reserves (China, Japan, Oil-producing nations) that have been buying our debt will turn their back (driving up the yields to ridiculous levels)

Plus even if the Fed doesn’t buy down the curve to drive money to corporate paper and mortgages, the Fed may still do same for separate reason to force borrowing through buying treasuries on our behalf and forcing that money down our throats.

Yet, don’t forget Fed has to auction over two trillion this year, so one could argue the money required to buy down the yield against that massive auction would compromise the Fed’s balance sheet (beyond the ridiculous levels of money printing already reached)

I’m on the side now. I am of opinion that this recession/depression will eventually give us really low yields at auction again, and THAT will then be another good opportunity to go short again.

[stockstradr]

esmith,

YES, I can understand your pumping and pimping your “miners” to get suckers to buy ’em and push up the price.

After all, you have a LOTTA ground to make up.

You were buying them back in Oct 2008 and advising us do the same:

http://piggington.com/undervalued_stocks

And now your RTP has fallen from your purchase price of $139 down to $86. That’s -38%! Nice call on that one.

If you want to get some suckers to buy and push your tanked mining stocks up, maybe you should try a wider audience like make some videos for youtube.com?

Now I suppose I should finish on a positive note.

I have further tortured my mind by looking at a good number of your previous posts, and have concluded you frequently have given VERY GOOD advice on financial markets and investing (with exception of your stinking mining stocks)

However, now, yes NOW maybe MAYBE getting close to a good time to buy those general commodity mining stocks. Even a broken clock tells the correct time twice a day.

You have to remember that the commodities crash has really screwed the general commodity miners. They will go bankrupt if mined commodities continue to stay this low…additionally, mining requires continual and substantial re-investment but the credit markets are frozen, esp. for the miners.

Yet, the gold (and silver) miners are making plenty of money because precious metals never fell nearly as much in price as did other mined commodities.

[stockstradr]

esmith,

YES, I can understand your pumping and pimping your “miners” to get suckers to buy ’em and push up the price.

After all, you have a LOTTA ground to make up.

You were buying them back in Oct 2008 and advising us do the same:

http://piggington.com/undervalued_stocks

And now your RTP has fallen from your purchase price of $139 down to $86. That’s -38%! Nice call on that one.

If you want to get some suckers to buy and push your tanked mining stocks up, maybe you should try a wider audience like make some videos for youtube.com?

Now I suppose I should finish on a positive note.

I have further tortured my mind by looking at a good number of your previous posts, and have concluded you frequently have given VERY GOOD advice on financial markets and investing (with exception of your stinking mining stocks)

However, now, yes NOW maybe MAYBE getting close to a good time to buy those general commodity mining stocks. Even a broken clock tells the correct time twice a day.

You have to remember that the commodities crash has really screwed the general commodity miners. They will go bankrupt if mined commodities continue to stay this low…additionally, mining requires continual and substantial re-investment but the credit markets are frozen, esp. for the miners.

Yet, the gold (and silver) miners are making plenty of money because precious metals never fell nearly as much in price as did other mined commodities.

[Author]

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