EDGE TRADER

Tuesday, August 02, 2005

Chess Club

It's a miracle a stock picking geek like me hasn't talked about Chess Club yet. I can play chess. I am actually pretty good (except for my downfall - I'll get to that later). There weren't many people out there that could beat me consistently. As a matter of fact I still remember with pride smoking my Physics teacher on a summer day in class in high school just because he bragged about how good he is. I pretty much dropped this game from my life in 7th grade. This occurred when I took a peek inside the chess club and saw who was there, or rather who wasn't. I did a complete 180 tout suite and didn't let the library door hit me on the tail as I made my exit. That was the end of my chess career, with the exception of my little bit of fun showing up Mr. card carrying chess federation physics teacher. In return, I recieved a social life and a date or two during high school. But why talk about chess in an investment blog?

It's what Chess is really all about it for those who haven't tried the game before. Chess is about anticipating what's coming next and being able to think a few moves ahead. The stock market is a lot like playing chess. If you haven't thought ahead about what comes next from your opponent and gotten there first, well simple - you'll be cleaning up the pieces while Anatoly walks away with a smile. So in this blog I must send some props to my opponent, Jim Cramer, who has beaten me to the oil sands play I'd just begun researching after reading an article about Canadian shale oil somewhere - I think last week's NY Times. It is easy to beat the masses to stories like this but this guy is a lot more formidable competition. Some dislike the man, but I for one tip my hat. Not for the stock tips - once he mentions a stock, the money is made and the entry is destroyed (at least in the short term anyway) - it's the competition and thought that his presence forces on me - I've got to be smarter and faster than the guy and that's not easy.

Business of the day:

I did beat Cramer to the punch on Lasers as I purchased CUTR at the close for $20.50. I will have to send a thank you card to everyone who made that possible; Nasdaq, a premature profit taker somewhere on the other end of cyberspace, and the camp counselors watching my kids so I can press the buttons to name a few. Nothing is real until the exit is made, but I have a feeling I will soon be saying score one for Mitty on this one.

My family is asleep, and here I sit at 12:05am, feeding my addiction (restrain yourselves ladies, I know I am a wild man) by listening to the earnings webcast from EFJI. Liking what I am hearing so far I gotta tell you. They are smoking estimates, guiding up, and increasing margins. I sold a little this morning to reduce risk prior to earnings announcement, but I will be buying back at the earliest opportunity based on this.

How else did I do today? My trading day could have been better (also a lot worse). My overnight trade in MFE netted me +.74% after commissions. Today was the technicians day in this stock - it made a point of first filling the previous gap before marching up my way until my exit at $30.42. Had I more trading liquidity I would have been able to do better than .74% - I was only able to add an additional 20% to my position at $29.85. If I was more liquid at 12:30, believe me I would have doubled down.

But the real pesos came from my long portfolio, which increased by 1.01% today. It is difficult to get into cash - there are too many stocks with solid upside potential. I may revise my previous goal of 50% - that is going to be really tough, and today at least, my long portfolio outperformed my trading capital.

I am once again doing a 180% and in the hunt again for a short term swing in a driller - the problem is that I may have to watch like a hawk just to find a temporary flat moment in one of these stocks. Crude dipped today and by all rights, the drillers should have followed. The fact that they didn't just increases my conviction that they are the place for some of my trading capital too. My entry may now look like buy on a pause rather than buy on a dip for one of these stocks.

Screeeeech - more on EFJI - just got to the part hemming and hawing about "if and when we decide to do a potential future equity offering" - just slammed the brakes so hard I'll have to pull my head out of this blog text on the screen with both hands. I still like the stock, but that does put a damper on the party. Sorry - back to the action.

I think I will forward this post to MadMoney as my thank you - I appreciate the competition Mr. Cramer - you are not as easy to show up as my physics teacher, but count on a little unseen stock geek like me racing you to the next idea!

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