Investor Types --- Heads Up!!!

[artto]

I simply brought this up for consideration, for specific reasons already mentioned. It is not a recommendation to buy. Everyone needs to do their own homework and make their own decisions based on their own goals, objectives and criteria.

As for me, I'm not the "buy & hope" type. I trade more than "invest". I develop my own trading systems designed specifically for each security I trade or invest in. In any case, I still intend, at some point, to put a REIT or two like WRS or Healthcare Realty (HR) into the portfolio as core holdings because over the next 10-20 years I see substantial need and growth in this specialty real estate area (and I don't think the idiots in Washington are likely to do anything to stop lining their own pockets with profits from the healthcare industry that eventually make its way back to them one way or another). At what point I enter the position, whether or not I keep them, and for how long, the market place will determine, not me.

Personally I think most funds are rip-offs and poorly managed. They all have their "rules" which do not change with market conditions. Most have gotten too large to manage effectively. At best they are simply averages of the average.

And Johnny, so far you're doing real good (I'm on your side). You haven't mentioned FIBonacci!

[Colin]

so now REIT is a cocktail party topic, the top of the RE market is near...

[Colin]

WRS trend is up, beats S&P 500, yield is high (typical of REITs BTW) but PE is VERY high, so not a long term hold, more of a yield paying interest rate play...

thanks,

[artto]

All true Colin. But regarding the P/E, the only reason it's high is because the company was formed in March 2002 so it's only been around for 3 years and is already beginning to turn a profit. A high P/E often reflects this in the early stages of profitablity. BTW, according to WRS website, WRS is the "only independent pure-play income producing medical facilities REIT". It also has a substantial number of large widely recognized institutional and mutual fund holders.

Again, let me reiterate that this is not a recommendation for anyone to run out and put this in their portfolio. It's just that I found this interesting in light of the changes occuring at Klipsch in recent years and had wondered what might be in store for Klipsch, possibly going public, with an "umbrella" of brand names, like a Harmon International. Well, now we know Fred is directly involved at the helm of least one public company. Just some food for thought.

[johnyholiday]

http://www.spiraltrader.com/start.htm i got your fibanacci right here, what software have you used ,i agree with your mega trend of the baby boomers it will move the whole market the market is going to soar in the next 4 years ever seen a chart of the boomers births lagged 48-51 years old, the average age of a boomer layed over a long term chart of the s&p 500 , but i'm a chart man ,an i see a large 2 year inverse head an shoulders bottom an then another 3 year inverse head an shoulders bottom the 2 year being inside the 3 year ,an the s&p 500 just broke thru the neckline recently take a measurement on the pattern size, from the neckline to the formations bottom an add it to the break out at the neck line this will give a projection of the price move ,an the market is in for a large move ,this is into the realm of pattern reconition ,go peck around at this site ,an register an you can drill down one layer to intermedaite time charts, http://www.investtech.com/main/market.php?CountryID=100&product=0 some good examples of a short term ,rectangle formation recently in the dow30 ,if your a member you can veiw longer term charts ,an do scans looking for bottoming formation ,or topping if you like to short, speaking of shorty heres apple in a parabolic curve an they allways collapse on them selfs, http://stockcharts.com/commentary/archives/cww20050219m.html#carlswenlin ,go down about half way this is also a great free news letter ,okay enuff i'm going to rip the bugg screens out of my left cornwall ,WRS website was snazzy, maybe i will start a technical analysis , klipsch ,guitar,muscle car resoration, bootcamp& retreat

[artto]

Johnny, in all honesty, I think FIBonacci is a farce, at least when it comes to securities analysis. Somehow this indicator has attained a cult status following the last 10-15 years. Dont get me wrong, the Fibonacci sequence (or Golden Mean/Ratio as its also called) has its applications, but the financial markets (IMO) are not one of them. I used the Golden Mean with regard to my listening rooms acoustics to calculate the room modes and determine the proper room proportions/dimensions to minimize any adverse compound resonaces. However, unlike the markets, the surfaces of the room are not moving around all over the place independent of each other. Even then, once the space gets large enough, the Fibonacci ratios have no significance in acoustics either. I occasionally look at Fibs on the charts, primarily just to see if there is any confirmation of what I already know or suspect. But in my opinion any one who uses Fibs as a primary trading tool is asking for trouble. The use of the word fib in Fibonacci is no coincidence. On the other hand we all know virtually anything works for a while. And to me, thats the problem. How does one build a robust trading system, one that works well into the future?

As for software, Im using MetaStock, with two plug-ins from Adaptick, ICE (Indicator Categorization and Election) and PowerStrike which analyzes the options chain for support and resistance, and Reuters datalink. ICE basically changes the way one would approach trading system development from the old method of developing a one size fits all approach to building a customized and robust trading system for each specific security that you want to trade. It can also do explorations across the entire market to find other securities that fit the trading system. Of course this is just a starting point. Just because I get a Buy signal doesnt mean I should jump in. You should still have a method to determine short and long term trends and when those trends are about to change, look at the sector and broader market trends, etc.. MetaStock helps me consolidate all those things too. I was considering moving over to TradeStation but some problems I was having with MetaStock/ICE were finally traced to Microsofts JET Database Engine which apparently couldnt withstand the 11,000+ calculations ICE goes through to back test 80+ indicators from 4 different categories to find which one from each category works best and weight them appropriately. So now I just perform the back tests one category at a time, which also has the advantage of making it easier to sort through the data. It took me about 4 months to develop individual trading systems that I felt I could trust for about 40 stocks. 15 of these are for nanotechnology companies. I use FFT (Fast Fourier Transformation) to determine if the customized trading system is still valid or needs to be changed.

As for Apple, yes I agree about the parabolic thing, but Im still long Apple. Its trend is still up. And it had a 2:1 split today. The chart doesnt look quite as parabolic now. Of course the appearance is influenced by what kind of scale, linear or logarithmic, is used (log shows percent changes more accurately IMO). After the previous split, which occurred during the bubble burst in 2000, the price actually took another 3 months to reach its peak even in a down trending market. As Im sure you know, after a split the price often continues up as demand increases because many people seem to think that the stock is somehow more affordable even thought its market cap hasnt changed. At any rate I have a trailing stop/loss in under the price. Ill let the market take me out when it turns.

Colin could very well be right about the market topping out round here (again). You can see it in the Stock chat rooms. Once again theres an abundance of 18-20 somethings looking to make a killing in the market with the hope of retiring by age 30.

[Colin]

in my years as a broker, then trader, when the public called you to buy, it was sign that too many people were making too much money too easily, inexpereinced people forget that losses are more important than gains!

WRS is a good stock, but what is its upside potential for either a short term pay or a long term hold? Compared to other, faster movers?

[artto]

Colin, some of my philosophy is similar to Bill ONeils, that all stocks are bad. There are no good stocks to buy unless they go up in price. In the short term (12-04 to now) WRS has been trending sideways. Its upside potential in the short term is questionable. In the long term, it really hasnt been around long enough to determine any significant trend. It just barely meets the minimum required time frame for my software to produce a trading system with any statistically significant validity. At this time, for lack of historical performance, one could probably take a look at its competitors such as HR or HCP for comparison. They all have very similar price/volume movements which is typical for any given group or sector. As a potential long term hold, I guess at this point if/when I put my money down on this one, I would primarily be looking at the dividend yield, and placing a bet on Freddy, Lanham and their cohorts management abilities. And in general, IMO, this is a good sector to be involved with for a longer term investment because of increasing demand due to the changing demographics of an increasingly large aging population.

[Colin]

so how do your charts see past and future 3 and 6 months in DJIA and SPX?

[artto]

see 3 and 6 what?

[Colin]

past and future 3 and 6 months in DJIA and SPX?

[artto]

Well technically speaking (no pun intended), charts dont see anything, but I understand what youre saying. Its the person looking at the charts that sees things (LOL). That being said, IMO charts dont see anything looking forward (although some will disagree). Thats the domain of prediction, and Im not into making predictions, especially when it involves relatively short time periods like 3 to 6 months. I prefer to simply let the market tell me what to do as opposed to try and second guess it.

Looking at the previous 6 months both DJIA and SPX were in an up trend.

As for the past 3 months, it appears (as of this moment) the DJIA and SPX have failed to break through and remain above their major resistance (Dow 11,000, SPX 1220) 3 times, two of those attempts more recently. This is probably not good if your are long or considering going long.

In terms of detecting trends I prefer to keep it simple. First I measure the long term trend. This is done on a weekly chart using 10 and 40 period moving averages. When the 10 is above the 40 and moving up, and the close is above the 10 and heading up, the long term market bias is up. If the close is between the 10 and 40 the market is in a whipsaw, price consolidation, hard to trade range. When the close drops below the 40 week MA, and the 10 moves below it also, then we have a trend shift downward, the market bias is to short (sell) trades. For determining the short term trend I use daily charts with 5 and 20 day MA as above.

So based on the above, where are the DJIA and SPX moving averages now? The DJIA long term 10/40 weekly MA appears to still be in an uptrend (just barely). On a short term basis, same thing. Same thing for the SPX except that its very close to breaking its short term upward trend. The 5 and 20 DMA are now on top of each other with the 5 just barely starting to cross downward below the 20.

You'll have to draw your own conclusions.

[Colin]

so if you are not into 3 or 6 month periods, than where does something like WRS fall?

its yield makes it an attractive hold, if the price holds up, but the high PE and the recent sideways pattern might indicate a break, a lagging period, when it can't be sold, before significant appreciation, in other words, it can only be a long term buy and hold...

[artto]

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On 2/28/2005 6:24:13 PM Colin wrote:

so if you are not into 3 or 6 month periods, than where does something like WRS fall?

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What I said was I'm not into making predictions, it has nothing to do with how far ahead one looks. Generally speaking, for the most part, over the long term, the market moves up. 3 to 6 months is a relatively short time by comparison and pretty much anything can happen, the kind of things that are never indicated or implied by any chart or trading system.

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On 2/28/2005 6:24:13 PM Colin wrote:

its yield makes it an attractive hold, if the price holds up, but the high PE and the recent sideways pattern might indicate a break, a lagging period, when it can't be sold, before significant appreciation, in other words, it can only be a long term buy and hold...

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Correct. I would consider this a long term buy and hold although from my standpoint I would wait for a buy signal from the trading system my software produced for WRS. When that happens I would compare the short and long moving averages as explained in my previous post. If those are in an uptrend as I defined it, then I would take a look for the same in it's sector and some of WRS direct competitors, as well as the broader market (ie: DJIA & SPX), as well as the options chain to see if it also is buy enabled. If everything is kosher then I feel I have a reasonably good chance that I've entered the position at point where my risks are minimized. I would also put a sell stop loss order in at the recommended price (as determined by the trading system software) after buying it. Preservation of capital is extremely important. Its all about risk management. As you said, "losses are more important than gains!"

[johnyholiday]

And Johnny, so far you're doing real good (I'm on your side). You haven't mentioned FIBonacci!

Don't temp me "The Psychology of Technical Analysis-Profiting from Crowd Behavior and the Dynamics of Price" by Tony Plummer is a great book for 1.618 formula followers. Running with the herd on Apple now thats exciting. Don't over optimize those moving averages maybe even use a ribbon of moving averages ie 21,52,104,208 day. An you tempted me, but as your fibonacci sequenced body ,is sitting in your fibonacci sequenced listening room , i will prove your body sequence, fibonacci numbers are to be found in the structure of the human body ,the body has 5 boney appendages(2 arms 2 legs and 1 head),each of the arms and legs has 5 appendages(5 fingers and 5 toes),the head has 3 protubrances(2 ears an 1 nose),and 3 distinguisging features which are flush to the face (2 eyes and 1 mouth),human being also have 5 physical senses ,logarithmic spirals can be found within the human , the inner ear, an even the left ventricle, the question is:why is this so , is it each arm of a galactic spiral has a logarithmic shape, or pulsar radio waves conform to fibonicci numbers,or venus has 5 regularly spaced occultations durning an exact 8 year period , the list ,in fact is endles fibonacci numbers an logarithmic spirals are a fundamental part of the mathmatics of nature, philosophical implications of the golden ratio (greek letter phi the 21st letter),would only be one more tool to use in investing ,or listening rooms ,or life

[johnyholiday]

here is a long term chart that i just love of the market first chart labeled THE BIG PICTURE the two red posts at top right are the 911 attack http://stockcharts.com/def/servlet/Favorites.CServlet?obj=ID147612

[johnyholiday]

an for neuronets http://www.wintick.com/6_0/home.asp always invest at your owen risk ,you bathroom or home theater remodel, might be the better of the two , Home Depot had good quarter ,must be the rope caulk demand

[johnyholiday]

Pru's watching the boomers an their disobedent children an i'm lol$ all the way to the bank lol$ i like fig1& fig41, http://www.cm1.prusec.com/yararch.nsf/(Files)/consumer.pdf/$file/consumer.pdf , and another tiny little chart at very bottom of page, that i love the market an the population wave http://www.businessweek.com/archives/2000/b3674175.arc.htm#B3674177

[Colin]

I like the charts, reminds me of Twains there are lies, there are damn lies, and then there are statistics! All those fancy words and lines only mean that when there is a boom in prices, it is followed by a bust. Duh! He also points out that HALF the time the market is below the median isnt that what a median is?

He labels the same period as both the Big Churn and the Big Empty-

What he doesnt say is that short and sharp correction will suck volatility out of the options, run through the protective stops and free the SPX to move higher

The reappearance of numerical sequences in anything, human body or markets, only shows that once taught their 1,2,3s, that human babies retain the ability to count well into their middle ages.

Are there discernable long and mid-term cycles in solar activity, lunar patterns, tidal effects, weather patterns, crop production, farm prices, labor supplies, industrial demand, sector dominance, political poles, religious fervor and just about anything that humans can measure? Certainly. Can we apply averages and medians to sets of data and extrapolate when those sets are above or below or out of line with the median? Certainly.

But to believe that a particular sequence in the overall stock market corresponds closely to a previous set of patterns is to ignore all other changing variables as if they do not exist. We have events happening in the global markets which have never happened before. For example: An incredibly strong USD remain even after the US stock markets crashed, while Chinese demand for raw materials and goods rose 40% for several years. Russia nationalized their oil industry while the oil cartel squeezed the price of oil. These huge waves, and many others, impact the decisions of the mere humans investing in the US markets. The affect of which is yet to be determined.

Believing a particular numerical sequence corresponds closely to a previous pattern ignores these huge waves. Numerical patterns are a self-fulfilling prophecy. Some numerical chart or pattern, such as the spiral, will always fit to some numerical set of data. Any data. The only relevance is that it fits. Done. End of story.

To better analysis the fundamental operations of the underlying sectors of the market, you need to carefully examine a huge stream of data from all relevant sectors, develop correlation coefficients on the relevancy of that data to the resulting prices and then study those relevant sectors. Most of us do not access that kind of data or analysis, but if you read the reports of the Federal Reserve regional banks, you can see that they do.

To say that we are in a period of a Big Churn is to belie three truths: One, there is money to be made investing in the markets, whether long or short term, up or down. Two, an overpriced, or at least fully valued, bull market leads to a corrective bear phase. There is one bull and bear phase per decade.

Actually very interesting charts, does he do this for individual stocks? How much does it cost?

[johnyholiday]

http://stockcharts.com/ ,it's free , called the public chart area but the people posting the charts ,are members an then they are voted on, an the top votes get 3 free months added,,love the twain"", another great site an free http://www.smallinvestors.com/ ,the thing on the big picture chart http://stockcharts.com/def/servlet/Favorites.CServlet?obj=ID147612 ,is the breaking of the median line that is significant an babyboomer related ,then the index moved to the top of the price channel, an the tech wreak the dot com bomb was on in 2000, the index came back down an bottomed or tested the median line, the next major top will be at the top price channel, going foward driven by the boomers, then watch out below until the boomletts show up in about six years ,in fact some software is writen by programers ,that write the guidance systems on mmx missle an such ,John Elders of MESA systems being one, http://www.mesa-systems.com/ ,i hope they have there alog(rythems) dialed in,you can't pigeonhole the market something that adapts it's self to evolving market conditions, an fuzzy rules are adaptable, a fuzzy enference engine, fuzzy logic ,using technical an fundamental methods,can generate a confidence measure, avoiding the all or nothing problem, fuzzy logic is very robust; refering to a system's ablity to handle a number of different kinds of environments,one of the major atributes of fuzzy systems, to the extent that the developer has been successful ,in uncovering the underlying function;it's trying to uncover the underlying function, that describes the process,not relying on a crisp threshold ,waiting for the perfect signal,the inference process in the fuzzy logic engine ,will be able to handle ,the changing enviroment,especially true incorporating a basic feedback loop, http://www.aiqsystems.com/ uses an enference engine , the program writers a husband an wife team , use to write supertanker saftey systems, don't want one of those to blow up, my fuzzy logic is, always going to be different ,than the next person,an any time you rope caulk,do a room treatment,or such, you are using your enference engine ,building your rules ,for your fuzzy logic system, making it more robust ,an thanks for making the forum members, part of your feedback loop. oh an one last one, elliotwave an astrocycles ,http://stockcharts.com/def/servlet/Favorites.CServlet?obj=ID26831 , my cornwalls always sound better on full moons,new moons,new moon roosters ,an uranus direct, go figure