Re: Question for investors, traders...and investment types (and for Michael Ross too!)

Using Taylor's quotes from an earlier post:

>As in trading, your position must be right in the beginning.

Entry point is key to making a decision in investing. And when you're buying options, in our case Leaps, this is even more important. We've
learnt from past mistakes and wait for what we read as 'bottom' or close to before entering a position.

So using this relatively simple approach, we don't need to lose sleep when we're experiencing a bear market. We know the stock has a history of good P/E, so we wait. It's when the outside influences take over, like the financial analysts beating down the stock for no apparent good reason, or the experts giving their forecasts, these are the kinds of irresponsible messages that can often instill a lot of panic into the market.

And I guess like many who get in excess of 100 junk emails and ezines every day, I've given up on reading and listening to the financial experts. I don't even bother reading what the Motley Fool or the Bull Market Report or even Kramer has to say. Even the Options Investor newsletter that I subscribe to, they'll suggest a new call, long after we've bought it (at a lower price) or converseley, they'll suggest you sell, and we'll hold, because we've been watching the stock and feel it's a keeper. They really are no wiser than
you or me. The 'experts' are all speculating. CNBC and CNN have to announce something, and the analysts have to do their job, but there is
absolutely no responsible reporting nowadays. The 'experts' were talking about a summer rally. Summer is almost over, and where's the
rally? Noone really knows. This is an election year and election years have always been strong for investors. Wrong again. What else can someone pull out of his bag of tricks to tell me that I haven't already heard.

Boyd and I share very similar feelings on investing.

>Why couldn't you find the companies you're interested in investing in, and then watch their charts for entry
>signals?

This is essentially our approach, which really has worked for us in the majority of cases.

>Additionally, why hold onto a losing position? >That's what the founder of the company >does--there's no reason >you have to act like >owners. Why not just take a small loss and then >re-enter if the stock turns around and >starts >moving up? (All it'll cost you is one commission >or whatever.) While holding onto a losing >position >means your money is tied up and not >doing you any good.

Again, I agree 100% here. When we first started trading, we held on to many losing stocks. Now, we just bail out, cut our losses and get into
something that looks like a winner. And we've tracked all those losses. Conclusion: we were far better to sell at a loss than hold them. And
overall, we're still very profitable, including the losses. I think this is a difficult thing for many to execute. Again, most of our portfolio is options, but even with stocks, we've still bailed out when the losses seemed like a waste of time to hold on, especially when your money is tied up with a loser and you've been watching other good stocks beaten down, and really want in. Again, this comes back to watching and knowing those select 10-20 stocks whose trading patterns you know and are following on an almost daily basis.

There's a philosophy that both my husband and I used to disagree on, that he's adopted in recent months. E.g. he would buy an option, in a
few days/weeks, he would see a 20-30% increase. But because we're human and many of us are greedy, he'll rationalize it by saying "well, I've
got another 16 months, that sucker could double or triple." And I would nag him to take his profits, put it in cash, and get back in later. We
know from experience that after 1-2 strong days, there'll be a lot of sellinng, and the stock will come down. Well, he's now saying "I'm glad
I sold all those gainers a couple months ago, because all the gainers are now so beaten down, it's a perfect time to get back in. I have
about four favourite options that I've traded this way, and these 4 have more than made up for all those losers that were just wasting space on
my PC Quotes screen.

Another strategy we've used, which has worked is trying to average down to minimize your losses. This has been successful most of the time, but
again, this is often throwing good money after bad. So again, you have to know your stock and determine whether it's worth the risk and whether
you can risk it when e.g. you've only got 3 months to recover, break even or much preferable, be profitable.

Regards,

Eliz.