June/July 2000 - Gainesville, Florida
[ As is my habit, I will be revising
the manuscript I have before me. ]
"Know thyself." Socrates
three of Brian's reflections
*
Botch after botch—despite my numerous
minor triumphs, it almost seems that unless
I fall I fail. 2-20-2000
=
Before one can be, one must first desire
to be, and then must sacrifice, must
"perpetually" learn.
See deeply—without
and within. Actuate. Create. Rejuvenate.
2-20-2000
=
If you have wisdom. Be jubilant.
Preface
form: freestyle
content: first as memory provides, and then as
present awareness revises
* There is an order herein; however, begin where
you will, finishing where you will; for the
whole shall remain . . . a fair while. My
hope is that my brevity throughout will entice
you to go out and discover more.
acknowledgements: IBD / WSJ / B / Sam Weinstein
William O'Neill / Peter Lynch / Wade Cook /
and all those publications and programs
and honorable persons I do not now
exactly recall / Ehrenkrantz / CNBC
-
Some will call
Many will send
But in the end
You are all
So if you attend
Attend with care
Let not befall
Conditions where
No one is there
-
-
With Apologies
And then there was
a rock of death
upon a placid sea.
And then there was
a wispy breath,
and it belonged to me.
And then there was
a brilliant kite
athwart the setting sun.
And then there was
another night,
and so much still not done.
-
Chapter 1 > the crash of 1987
I do remember the more than 100-point drop on Friday
and the more than 500-point drop on Monday. I do
remember I was into the rocketing stock of a new
environmental company. I do remember I was into
Bethlehem Steel. I do know that what I knew was
not sufficient. I do know many said they saw it
coming. I do know I felt bewildered. Changes in
the fortunes of a stock or a stock market do occur
more rapidly sometimes than an unfocused mind can
ever be ready for.
Chapter 2 > WMT BAC EMC AMGN
This difficult memoir of my in-the-market years
is not so much a recollecting I want to set down
and share as it is one I need to. Still, I ask
no one to accompany me.
After the crash I somewhere heard that Wal-Mart
would now be an excellent long-term buy. I let
that advice linger in my head for some while,
but I never did buy into that company.
I do not recall when, but there was a concern that
Bank America was endangered. A day the stock
traded at $5.00 a share did come. I didn't buy
into that company either.
A certain "young" company had a large contract
with IBM. That company was EMC. Twice I bought
and sold some of its shares. Something went awry
between those two firms around that time, and IBM
divorced itself from EMC. EMC's stock plummeted,
but the company did not die. I do not recall
when I was holding EMC shares, but I do know
I did not keep any.
Much froth washed around an actually deeply
valuable biotechnology firm named Amgen. The
excitement one day gathered me in and I bought
I think 50 shares at around 55. No matter.
The point here is that that stock sloshed
between 50 and 60 for a long while, and I, not
privy to what this meant, simply lost patience—
a character flaw that has more than once slashed
my spirit—and sold at a loss the shares I
had, leaving me to watch amazed as immediately
thereafter Amgen's stock tripled in price.
-
[ Have changed my mind. Am going to try to put
this memoir up in one post. ]
-
Chapter 3 > reiterations
Actually, this interlude chapter is likely to be
more than just reiterations since now is the time
to explain the title I have chosen. Much of my
life I breathed joyously the atmosphere of litera-
ture, especially the craft and art of making poems.
Many other hours of my life I likewise breathed
the craft and art of discovering patterns in the
mystical dance of numbers. Challenges: every-
where, challenges. In 1982 I took a Myers–Briggs/
SCII test which revealed to me I am an artistic
and investigative INFP; that the best career for
me was librarian. I did not become a librarian.
I did not become a "Wall Street" researcher. I
did buy a mere three shares of UAL and a short
while later sold them and made $3.00 above com-
missions. No high endeavour allows one much
wriggle room as it calls on one's intuition, one's
attentiveness, one's belief in self, one's ability
to decide effectively at a cursor's pulse. What-
ever high task one moves to perform, intelligence
is not enough.
How many times did I fail to hold, to sell, to buy
when I ought to have? Too many. Unless one's
entire being coalesces as one undertakes a high
endeavour, Failure awaits, with its hanging rope.
Chapter 4 > DELL - early on and before the big push
I had never heard of Dell until I overheard a client at
the securities office mention to one of the brokers
that Dell stock had been sliding strongly recently
and that he was considering selling the shares he
was holding. That was early on in the life of Dell.
I do not recall doing any research on the company,
but I do recall thinking an excellent buying time
might not be far off. I did not buy.
Years later the phone rang, and a broker from a
company somewhere out there, a definitely honest
and caring broker, spent some while with me/ trying
to convince me to buy DELL because soon it would
appreciate vigorously, but couldn't, and all because
of my aversion to purchasing stocks by long distance.
Had I said yes and bought say no more than 5 shares
and then held them until the DELL enthusiasm crested,
I would have been grateful to that man I put off.
Proceed alertly.
Chapter 5 > timelines
Making money in the stock market is enchantingly
easy. However, you may have to tie your weaker
emotions to the riggings.
In this chapter I want to key on timelines.
Over the years I have gotten hundreds of mailings
from market newsletter writers and publishers,
and have always found myself snickering at those
who thought gains of less than 50% in a year's
time was super. I even snickered at those who
thought 500% over 4 years was eye-opening. Why?
In my window of exposure—tiny though it was—I
had seen such gains and better in less than a week.
They, of course, were not wrong. Iimelines.
Whatever public stock is out there/ is on a journey.
It may be a rather smooth one. It may be a ragged
one. "Neither a borrower nor a lender be." Shades
appear! Is there nowhere that "upstart crow" doesn't
caw? Don't get me going or I will play my fife tune
on my beloved master the rest of the day. The state
of the English language then and now out there/ is
on a journey. It therefore behooves the buyer/ of
whatever public stock/ to breathe deeply and see
distinctly as regards that whatever/ before buying.
To invest or not to invest, to trade or not to
trade, that is the quest you're on. First know
thyself said Socrates.
Timelines. There are 3 essential ones that imme-
diately present themselves:
1) the buyer's personal timeline
2) the macro-economic timeline
3) a given stock's here-and-now timeline
I am not going to proffer advice on the above, but
I am going to put up some cautions. You can be an
investor, and do extremely well; many have. You
can be a trader and do extremely well; many have.
You can be both an investor and a trader and do
extremely well; many have. Know this though: a
successful trade may require that you monitor the
movements of a given stock since your timing may
need to be seconds sharp. Further, a successful
trade does not mean in today and out today on its
face. You must treat each situation existentially.
Has I Bank America shares at $5.00 and held them
until today [today being a day in the year 2000]/
that would have ben a mighty investment, but it
would also have been a successful trade. Do not
stumble into the trap of seeing everything one way.
Chapter 6 > HD / CSCO
Another day in the office of marching securities,
an investor I only saw that one time/ let it be
known he had purchased Home Depot stock and
that it was doing well for him. I/ in my myopia/
checked it out thereafter, but concluded it was
too expensive. This was before 1990.
How it happended I do not know, but in line with
my usual tendency, when an interest deepens, I
often immerse myself. So, I had gotten into the
habit of watching CNBC programs whenever I could.
Certain moments have nested themselves securely
in my memory. One such centered on an analyst
whose name, I am confident, was Ehrenkrantz. He
stated he favored owning part of one great com-
pany over diversity investing. He announced
that just such a company would soon be going
public and that investors should buy shares of
that company at that time. The company's name
was, and still is, Cisco Systems.
I remember that for 4 or 5 days I phoned to see
if the stock of a company called Cisco Systems
was trading yet, and then deciding to forget it.
Chapter 7 > Sam Weinstein / William O'Neill /
Peter Lynch / Wade Cook
Mr. W*, the tape reader par excellence, taught
me this: Determine whether you
are a better investor or a better trader, and
then strive to be the best investor or best
trader you can be. He also taught me this:
Always believe the tape, or in other words, be
the market bullish or bearish, there will always
be stocks rising sharply and always stocks falling
sharply.
Mr. O*, well-known editor of IBD and promulgator
of a strict but highly profitable
method for evaluating stocks, taught me this:
Wonderment. I did, however, often profit from
the timely information in his newsletter.
Mr. L*, the early Fidelity Magellan master,
taught me this: Buy what you know,
and what you also know has a product or products
that are selling exceptionally well. He favored
predictable growth companies over, say, high-tech
companies.
Mr. C*, "c" mayhaps for controversial, taught me
this: The long run is fine: but
if ye seek out the most volatile stocks, stocks
in wide but active trading ranges; if you can
be ready for and buy early into what he calls a
stock on a "candlestick" run, you will do better.
I have read probably at least twenty books on
investing, and have gleaned shining insights
from each, but unless you have/ or have culti-
vated/ traits which allow you to profit from
such knowledge, failure will out. Intelligence
is not enough. I know, and I know absolutely.
I have even been on the scene when sudden price
explosions were about to occur and have said
to a broker: "Here we go again." And still not
made a purchase.
If—to limit losses—you sell quickly, be just
as ready—to limit losses—to buy back quickly.
Chapter 8 > ORCL / IOMG
Around November of 1990, due to conditions at work
and at home, I quit the market. About that time
word was out about two companies, one of which I
became aware through the chance reading of a
column in one of the famous wealth magazines,
and one of which I became aware through a similar
column. Both of their stocks were around $2.00
a share. The first was a turnaround expected to
rise to $20.00. The second was a high-tech firm
with a hot new product. I doubt that anyone knew
for sure how high/ its stock would rise. That
company was Iomega. I do not normally picture
myself as a black-and-white person when it comes
to opinions on most things, but when I decided
to quit the market, I quit it. Had I had a smidgeon
of wisdom I would have treasure-chested a few
shares of each company. Five years later, when
I returned, the latter was bouncing from 25 to 50
to 25 to 50 to 25 to 50 to . . . like a yo–yo, and
the other was slowly making its way to 25. Time
lines.
If I am correct, while I was away from watching
the tape, Oracle's stock descended to $5.00. I
learned of it through two employees at the hotel
who were in some stock contest for college students.
One of these guys was from Thailand. (Herein winks
a non sequitur.) He said that at $5 he was buying
Oracle. Yes.
Chapter 9 > intelligence is not enough
Chapter 10 > QNTM / CELG / VTSS
When I was buying Quantum Corp stock I followed
my intuition, breaking from the O'Neill dictums,
and made my initial purchase when I "smelled" a
breakout coming, not as the breakout was on. I
did fairly well, and felt pretty good about it.
Recently, at some goodly site, I found a trader/
investor who initially purchases stocks as they
are rising from a bottom. I once read about a
dentist who went to using that approach because
he wasn't having any success other ways. I once
read a small book that detailed this manner of
purchasing stocks. I think its title was The
Phoenix Approach. This is scary—maybe, but
it just flashed in my brain/ I may be better at
listening and reading than I am at doing.
The story of my Celgene purchases is not at all
pleasant. Off and on I have taken pleasure in
fancying myself as one who understood the impor-
tance of/ and was able to spot the presence of
investor craving, but I have so often missed
understanding much of anything I—. During the
Asian quake of '98 Celgene's share price sank
below $5.00 for part of one day, and then—bing,
bing–bing, bing—in 4 days it was nearing $10
(or may have been even higher). Sometime later,
when it was starting to hit new highs I at last
got interested, but that wasn't until it was
trading in the high twenties. Hello.
And then there is Vitesse Semiconductor. My
days with it were when it was trading between
$18 and $28 a share. This was another yo–yo
situation. Do you know how to tell when a
stock is under accumulation? I only bought
a few shares, and I sold them for only a
paltry gain.
Chapter 11 > reiterations with a hammer
There is something for everyone in the stock market.
What that something is/ will/ for one be/ easy to
discern/ and for another/ barbed-wire difficult.
Stocks bottom. Stocks top. In a market whipped
into a feeding frenzy/ even investors should sell
as close to the top as they can reckon. In a
dumpster market/ even investors should watch for
that quiet time when the dumping has stopped, and
be ready to buy again as the dough begins to rise.
If you see that a stock spouted up to $11 say and
then sank back to its usual range between $3.50
and $5.25, be ready to do one of two things: buy
the stock when it is near $3.50 or buy the stock
just as the buying returns. There is a chance
that a stock like this is a one-time "spouter,"
but chances are it is not. Call the company and
ask for an investor packet if you think there is
time. Ask also for recent news. You may even
want to be on their mailing list. I know there
is nothing new here. Sometimes we need a hammer
to nail things down.
Watch the world. Watch the Fed. Watch the
legislators. Watch the sectors, and the
dissectors.
Chapter 12 > ZICA and the in-and-out month
And then there was this poor little stock trading
below $3.00 a share when suddenly heavy interest
kicked it up and I bought in.
I also did call the company and request information.
I didn't have a computer then.
Not sure, but close to 6 times I was in and out of
this company's stock, making $1000.00 in one month.
Fine, but I would have faired demonstrably better
had I not sold until Zi Corp's stock rose to $30.00.
Timelines.
#
Intuition.
Simple math. If you can afford to lose $600.00,
500 shares of a stock trading at $1.00 will be
worth $7500.00 if that stock appreciates to $15.00.
I'm dreaming? Do some research. Hint: robots.
I know of a stock that was what Mr. Peter Lynch
called a "no–brainer" stock/ when it was trading
near $90.00 in March of 1999. Many, however,
passed it by. That stock also easily fulfilled
"Mr. One–Up's" "ten–bagger" ideal. Questions?
Contact a bookstore/ gantly.
Chapter 13 > a true gift squandered/ & then
others the same
This is a chapter about risk.
Six months ago when biotech stocks were perking up/
a credit card issuer of mine raised my credit limit
#2000. I, I was quite surprised, but I immediately
saw as a gift from God, and indeed it was a true
gift. As soon as I had checks to do it with, I
used them for cash for trading purposes. It was
not rash to do so. Intellectually, it was not rash.
I searched for my savior stock. It wasn't long
before I found it. And that wasn't the only one I
found.
But each time/ I was like a soldier in the front
lines who just, just/ could not/ pull the trigger.
In the end I had to use that money to pay my bills.
Had I bought the first savior stock when I first
considered doing so/ and held it for 2 or 3 weeks/
I would have more than quadrupled my money. Had
I had what is needed to do that/ this e-tailbook,
in all likelihood, would never have been written.
Chapter 14 > DIGL / EWEB
After the last chapter, I am not in the mood to write
another, but the stories behind Digital Lightwave and
Euroweb/ need to be told. Did I mess up with these
stocks too? Somewhat. But I am not going to reveal
a lot about that. My purpose here is to show two
rather unusual examples of the importance of volume
and volatility.
DIGL It took some months, buth then the volume
swelled and the price rose from the $6/$7 range to
the mid/upper teens. What happened next is the
salient event of this stock's history. Two truths
first:
1) Growth stocks are volatile (I know you know).
2) Stocks that rise rapidly in price often give
back rapidly (I know you know this too).
Now, one wild day DIGL's price fell below $10.00
for a few casual sips of tea. That was that
stock's salient event, and that was the perfect
time to buy. $143.00 a share flickers as its
summit price.
EWEB This stock was at best a #2 stock though
from time to time it went higher. The story here
is in the strange shapes it took when the yeast
was in it but someone kept opening the oven door.
For no clear reason/ volume rose headily and
EWEb's price puffed to above $8, but in after-
hours trading flopped to barely $3. Slowly
thereafter it rose up again, and then puffed up
a second time, doubling in price, and then slipped
to $12 before rising back up/ all in a few hours
time. After that it dillydallied and went down
some. Then, one day, tremendous volume again,
and a third puffing, taking the stock above $21.
And then, and then, a long descent. This was
the "here we go again" stock.
Post Notes
You just never know, and in some cases you
absolutely will never know/ unless you try.
"To thine own self be true." Will somebody
please exit that guy from the hamlet. "A
horse! a horse! my kingdom for a horse!"
R—, here, go find him a horse: quickly,
quickly!
If, indeed, you have read this far, thank you.
Though there are few footnotes in this one-
day memoir, this quaint exposition, I do hope
you/ or you/ or you/ or you/ or you/ go to
the writings of those herein mentioned; and
my further hope is errors herein will be
forgiven.
[ This is not in the original, but there
were two great stocks I knew about
when they were penny stocks: Amgen
and Ultra Petroleum (a Canadian oil
stock). ]
One last thought. Well, maybe two.
*
Do not let your life wend on,
nowhere going, nowhere gone.
*
Let angels abound.
~~~~~~~~~~~~~~~~~~~~~~~~~~
And here is a version of Thinking Lizard:
mr00019
Saturday, March 7, 2009
Intelligence Is Not Enough
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