Wednesday, April 30, 2014

Wednesday's Outcomes: None

There were neither trades nor analyses to spice up the day. My earlier post, "Wednesday's Prospects: Round 2", gives specific reasons why nothing met my criteria.

More broadly, I see two reasons for the lack of activity. First, we are in earnings season and nearly all of the possibilities for trading identified in my first-round analysis fall within the 30-day earnings exclusion period. Once symbols near to an earnings release are eliminated, there are very few left over as potential trades.

Arguably, earnings have a major negative impact on my trading pool for as many as six months out of the year. 

Secondly, the markets broadly seem to be in the process of slowing in the uptrend that has been underway for the past couple of years. That doesn't mean that the party is over, only that it has reached that awkward silent moment in the middle of the evening when everyone glances at everyone else and realizes they have nothing else to say. 

Arguably, slowdowns like the present one have a negative impact on my results.

The earnings season problem and the slowdown problem combined mean that my trading funds are, for the most part, in cash. That's a problem. It is a core principal of trading that idle money loses value.

My rules are geared toward the short term, with positions lasting a few months at best. Those rules are doing their job by keeping me out of trades that seem likely to produce a surprise or a loss over the nearer term. Those rules aren't the problem.

However, exclusive reliance on the short term means that I'm missing out on the tax and dividend opportunities that come from holding shares for more than a year. The opportunities, I think, lie in diversifying my approach by adding a longer term component that will allow me to put idle funds to work.

I don't for a moment propose scrapping or weakening my present short-term plan. But I am looking at how to create a rule set that will allow me to supplement that plan with longer term positions geared both to growth and income.


My trading rules can be read here. And the classic Turtle Trading rules on which my rules are based can be read here.

Tim Bovee, Private Trader tracks the analysis and trades of a private trader for his own accounts. Nothing in this blog constitutes a recommendation to buy or sell stocks, options or any other financial instrument. The only purpose of this blog is to provide education and entertainment.
No trader is ever 100 percent successful in his or her trades. Trading in the stock and option markets is risky and uncertain. Each trader must make trading decision decisions for his or her own account, and take responsibility for the consequences.

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