More on Being Careful about to Whom You Listen -- By: Bill Kraft
Copyright 2008, CutLoss, Inc., All Rights Reserved
Bill Kraft
Editor |
Last weekend an anonymous subscriber wrote a caution on the blog
in which he noted: "Not to be a cinic [sic], rather a realist, please
recognize these blogs are solely published to drum up business for
their paid advisory trading subscriptions, books, seminars or a
variety or of other sales pitches. Although there are often some
merits to what they say, they are not written with YOUR best
interests, rather the authors [sic] bussiness [sic] interests. Always
be careful and cautious over ANY single persons [sic] opinions and
questions [sic] their motives."
First, I want to say that of course one of the reasons I write
these articles is to encourage sales of our subscription services and
of my books. I have never made any pretense otherwise. However, I do
agree, in general with the subscriber's message that all of us need to
be careful to understand the motive of people who may be offering
opinions and advice. One wonders, for example, why the quoted
subscriber felt the need to offer his opinion and advice. What ox may
he have to gore? We should always look to motive, his as well.
Certainly one of my motives is to sell subscriptions and books but
that doesn't mean that the information in the articles may not have
value to the reader.
The part of his statement with which I do disagree in my own
case is the writer's statement that articles are not written with your
best interests in mind. The fact is that I do try to write these
articles with your interests in mind as well as my own. That is why I
write about strategies for various markets (like selling short), money
management, business plans, education, and methods by which a trader
can reduce risk (like stops and protective puts), all subjects treated
in these articles. It seems like those types of articles are to the
readers' advantage as well as to mine when folks decide to subscribe,
retain me for a coaching session, or buy my book. There is no reason
why we both can't get a benefit. In fact, I think things are always
better when a situation is win/win rather than when I win, you lose or
you win, I lose.
The fellow does make an important point, however. All of us
need to be careful when deciding to whom we should listen. I have
written on the subject before and I believe it is critically
important. As an illustration, a year ago, I was invited to
participate in an investment group engaged in lending money. One of
the proposed borrowers was a builder in trouble. He had a number of
lots but was not offering them as security since they were already
pledged elsewhere. After the builder had made his pitch and was
excused, one of our group confidently made two statements, to wit: 1.
the housing crisis will be over in a year to a year and a half and 2.
none of us should be involved if he can't afford to lose $200,000 (the
pro rata amount to be loaned by each member of our group). I
immediately knew two things: 1. the fellow didn't know what he was
talking about because no one could possibly know when the housing
crisis would end -- witness the fact it is now past a year and the
crisis continues and 2. I did not want to be involved where the group
mentality was that it would be OK to lose $200,000. My idea is to cut
losses, not just to know I could afford to lose a specific amount and
this deal had no cut loss.
All too many investors listen to the wrong people. I once had a
trading teacher who said if you want to make $100,000 a year trading,
you should be talking to people who are making $100,000 a year
trading, not to Uncle Joe who lost his shirt in the market last year.
So many investors listen to the wrong people. They may listen to
someone at work or to a tip from a fishing buddy in making their
trading decisions. That may be OK if the friend has a valid basis for
the information, but often they don't. My suggestion is to make the
effort to learn investing and trading so that you have a basis upon
which to evaluate Uncle Joe's advice or the tip from the fellow at
work. Indeed, that may require that you be a serious student. You may
even want to go to a seminar or buy a book (maybe even mine). Failing
to make the effort can entail a much greater cost. Imagine
refusing to go to college or going to college but refusing to buy the
texts because the college charges tuition or because the textbook
publishers are trying to make money selling the books. While their
motive may involve profit, it doesn't mean they are out to get you.
Cynicism and paranoia are close cousins. Be cynical when evaluating
sources, but avoid paranoia.
I know the readers aren't stupid. You know that I would like you
to buy my book or subscribe to my service. What is also important for
you to know is that if you don't, it is still OK with me. Trading has
been good to me. I am happy to give some back even if that is my only
reward for writing the articles in the Newsletter. Not everyone is
trying to scam you. Of course, as the subscriber suggested some are.
Let me suggest that with the use of common sense you can figure out
who is and who isn't.
Good Trading!
Bill Kraft
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US Bancorp (USB)
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Here's a look at a trade Bill is currently working on:
Fortune Brands Inc. (FO)
Fortune Brands (FO)has suffered significantly along with
the markets as a whole and now has begun a new trend up. It closed
near a resistance on Friday and a break above the $40 level,
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Good Trading!
Bill Kraft
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Trend Trader -- by Bill Kraft
Trend trading as we try to practice it is a form of momentum trading. We prefer to try to capture profit out of the middle of the trend rather than try to catch reversal at bottoms and tops.
Here's a look at a trade Bill is currently working on:
Unum Group (UNM)
UNM broke above resistance on Friday after a strong week.
I would not be at all surprised to see a pullback and retest of the
new support around $15 and that could provide an opportune entry.
Good Trading!
Bill Kraft
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$10 Trader -- by Bill Kraft
We really enjoy trading stocks that are $10 and under. Often they provide the chance to enjoy high percentage gains and, of course, at worst, the risk is limited to what we paid for the stock.
Here's a look at a trade Bill is currently working on:
Micron Technology Inc. (MU)
I currently have some options positions in Micron (MU) and
the stock has floundered down to a double bottom with little downside
left. With risk equal to the cost of any stock, MU at the $2 level may
provide the chance for a run up to a target level near the $4 range.
Good Trading!
Bill Kraft
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