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Ocean Man

 
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  • Position Sizing And Averaging Down [View instapost]
    When to sell involves a lot of considerations, but here are my main ones:

    Has the stock that I bought below what I thought was its fair price returned to its fair price? Trade over, thesis gone, wait for the next dip.

    Has the stock jumped a little too far too fast / gotten ahead of itself? I sometimes think in terms of annualized gains, and take half or 3/4 of a return to fair price if it happens quickly.

    Has my bullish thesis deteriorated at all?

    Do I have a better stock available for the money in this position?

    Am I happy with my gain? My desire to not lose back my gain may outweigh my desire to get the last little bit.

    And then I also weigh in my macro views. If I think the market is getting a little toppy, or looks to pull back, I will reduce my longs even if it's not the perfect sell point on the individual companies, just looking to reduce exposure.
    Apr 5 11:50 AM | 4 Likes Like |Link to Comment
  • Position Sizing And Averaging Down [View instapost]
    As far as a screening process, I just read the news every day, and based on news and earnings reports, I put stocks on lists of like, don't like, and neutral. When the ones I like dip, or when the market dips, I buy the ones I like. That's oversimplifying, but that's the general idea.
    Apr 5 10:36 AM | 2 Likes Like |Link to Comment
  • Position Sizing And Averaging Down [View instapost]
    For the question about averaging up.... There are two main schools of thought in trading - Technical Analysis and Fundamental Analysis, and they are not friends.

    TA looks for support levels and chart patterns suggesting a bounce. You're attempting to pick the bottom. If the stock goes down, your thesis was wrong, and you should get out. Many TA adherents worship at the altar of Jesse Livermore, and believe if you were right for a day or two, you are going to stay right for another day or two, and you should add to your winner. That's not what I do. I've never been impressed by the success rates or rationale behind this school of thought.

    FA assesses what a stock should be worth based on discounted future earnings / cash flows, growth, buyout potential, dividends, etc. This is what I do. I believe in Benjamin Graham's statement that the market is just wrong sometimes. This provides prices which are both too high and too low at various points in time. I try to take advantage of these. Therefore, if I think a stock is a "good deal" at today's price, I will think it's an even better deal at a lower price.

    So you can see why there's debate around averaging down. Traders fall into two different religions with completely opposite views on the subject.
    Apr 5 10:28 AM | 4 Likes Like |Link to Comment
  • Position Sizing And Averaging Down [View instapost]
    For the question about me going in and out of the same names, yes, there are a number of stocks that I feel I know very well, and I have a price I think they're worth. I keep them on a watch list, and when they dip significantly below the price I think is fair, I buy them.
    Apr 5 10:13 AM | 2 Likes Like |Link to Comment
  • Position Sizing And Averaging Down [View instapost]
    Ok, for the question about how to bucket the stocks, there are many considerations, but here are the main two: past year's trading range and Beta.

    If Beta is low and the range is tight, then it is showing some safe characteristics. If Beta is high and the range is wide, it is showing some risky characteristics.

    APU - past year's trading range $41 to $50, high over low = 1.2, Beta = 0.3. Safe.

    BRK.B - past year's trading range $103 to $119 (when I bought it), high over low = 1.15, Beta = 0.3. Safe.

    TNXP - past year's trading range $0.36 to $21, high over low = 58, Beta = 3.4. Risky.
    Apr 5 10:09 AM | 1 Like Like |Link to Comment
  • Position Sizing And Averaging Down [View instapost]
    A couple of these questions require long answers which I will try to get to this weekend, but thanks everyone for the great questions and kind comments.
    Apr 4 01:54 PM | 4 Likes Like |Link to Comment
  • What Seeking Alpha Is Doing To Prevent Paid Stock Promotion [View article]
    I realize that this article is about combating paid stock promotion, but in the greater battle against SA being used for pure stock manipulation, I would suggest you consider rules around article publication in the last few days prior to monthly option expiration. Those attempting to maximize gains by manipulating stocks like to publish articles shortly after loading up on options when they are cheapest, just before expiration.
    Mar 27 07:10 PM | 14 Likes Like |Link to Comment
  • What Seeking Alpha Is Doing To Prevent Paid Stock Promotion [View article]
    Good to know, thanks Eli. There are a handful of us who read all of the Stocktalks every day, and it's kind of obvious to us who the promoters are. Their Stocktalks are all of the same "style", often a repeat of a previous day's Stocktalk on the name, often at the same time each day, often in a group of four or five posts by the same user. Not sure if that helps or not, but maybe can help you form a suspicion list.
    Mar 27 06:58 PM | 4 Likes Like |Link to Comment
  • What Seeking Alpha Is Doing To Prevent Paid Stock Promotion [View article]
    Eli - your efforts are appreciated. Allow me to give you an example of how this has been permitted here for years, though. The following contributor says right in his profile that he is a compensated stock promoter. Over the past three years, up through and including last month, he has published 14 articles, over 800 StockTalks, and over 3,200 Instablog posts. He's even been named in multiple articles exposing what you're attempting to fix:

    http://bit.ly/OYzN3D

    There are a number of others just like this.
    Mar 27 02:39 PM | 13 Likes Like |Link to Comment
  • More on Facebook/Oculus [View news story]
    I can reposition my head just fine without purchasing that.
    Mar 25 08:56 PM | Likes Like |Link to Comment
  • Recent ADP job gains revised lower, but others pushed higher [View news story]
    If the revisions swing by such large amounts months later, why should we pay any attention to today's number?
    Mar 5 08:35 AM | 5 Likes Like |Link to Comment
  • 2014 March Madness Trading Contest [View instapost]
    SLCA.
    Mar 2 09:35 PM | Likes Like |Link to Comment
  • S&P: BDCs no longer eligible to be in U.S. indices [View news story]
    I will absorb some of that overhang tomorrow.
    Feb 25 10:12 PM | 4 Likes Like |Link to Comment
  • Special dividend for the QQQ [View news story]
    My math says it's 4 cents to each QQQ share, currently at $90.
    Feb 23 09:37 PM | Likes Like |Link to Comment
  • Nabors' operating profit slips but results beat estimates, +2.3% AH [View news story]
    My diet starts tomorrow too.
    Feb 18 07:39 PM | Likes Like |Link to Comment
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