Seeking Alpha

Richard Shaw

 
View as an RSS Feed
View Richard Shaw's Comments BY TICKER:
Latest  |  Highest rated
  • ETF Asset Size Not as Important as Dollar Trading Volume, Ownership Turnover [View article]
    Ron, the data came from AAII database. will review and get back.
    Oct 24 09:40 PM | Likes Like |Link to Comment
  • The Dark Side of Stop Loss Orders [View article]
    Please take your conspiracy theory elsewhere. We were shocked the moment the stops happened and the chart crashed -- as you would have been. We were extraordinarily relieved to learn that the problem was not a real one -- as you would have been --, and that Schwab took appropriate steps (that they would also have taken for you) to correct the error. The only possible difference between our case and that of some other non-specific case is that we called Schwab to tell them we believed the trade was some kind of error about moments after it occurred. We don't know if they or other brokers have systems that can spot each and every case of such situations, or if account holders must call in some cases to alert the broker to the problem. If a trade is not "busted" after some period of time (perhaps same day), it becomes impossible or unlikely to be able to be negated. Lighten up on the conspiracy stuff. We may not be the smartest guys around, but we aren't stupid enough to do something illegal and then publish an article about it to hundreds of thousands of readers.
    Oct 3 07:50 AM | 3 Likes Like |Link to Comment
  • The Dark Side of Stop Loss Orders [View article]
    That is an entirely valid approach, and one we have used from time-to-time, but it only works when prices sink in an orderly way -- such as bad news coming out and a company falling 10% and basically staying there for a while -- not just a few seconds -- and after some days or weeks getting back to where it was as the severity of the news is reconsidered and found less damaging. Fishing for good entry points by entering GTC buy orders well below the current price, can sometimes net some good opportunities, but that approach can also hitch you a ride further down, if you have not made a wisely considered selection.
    Oct 3 01:18 AM | 2 Likes Like |Link to Comment
  • The Dark Side of Stop Loss Orders [View article]
    We got out well above 109 at a price roughly equal to that prevailing in the minute after the short crash. Very little damage.
    Oct 3 01:13 AM | Likes Like |Link to Comment
  • The Dark Side of Stop Loss Orders [View article]
    You suspect wrong.
    Oct 2 06:01 PM | Likes Like |Link to Comment
  • The Dark Side of Stop Loss Orders [View article]
    No idea -- just that the stops were not appropriately executed and were subsequently invalidated. You will note on subsequent price charts that the low price that stopped us out are not longer recorded as having taken place. Were taken out in the $101 range, yet if you look at LQD on StockCharts today, the low price was around $109. The prices that triggered our stops were "bad prints", meaning not real prices. Presumably there was a buyer on the other side and the trades were cancelled. Similar actions were taken in bulk by brokers as a result of May 6th.
    Oct 2 06:00 PM | 2 Likes Like |Link to Comment
  • The Dark Side of Stop Loss Orders [View article]
    The problem with percentage trailing stop loss orders is that when they expire, the system forgets the highest attained price. Example: You buy at 100 and set a 10% trailing stop. The security goes to 150 and the stop becomes 135. The stock drifts down to 140 and the order expires. If you put a new 10% trailing stop in the trigger will be 126 instead of 135. You then need to make a coping action, such as putting in a fixed stop at 135, and then monitor perhaps daily to see when and if the security goes above 150 when you can cancel the fixed point stop and put in a new 10% trailing stop -- too much work -- loss of tick-by-tick monitoring and triggering.
    Oct 2 05:59 PM | 3 Likes Like |Link to Comment
  • The Dark Side of Stop Loss Orders [View article]
    Certainly whipsaws as you mention do happen, particularly if your stop points are within the reasonably expected price variation of the security. However for price variation outside of the reasonably expected levels, they can be quite helpful. Being stopped out in mid-2008, before the crash but after a decline from the Oct 2007 high could have saved many investors plans for retirement.
    Oct 2 09:05 AM | 2 Likes Like |Link to Comment
  • The Dark Side of Stop Loss Orders [View article]
    You are correct that stops are not protection, as insurance. They are protection against losses greater than an amount you are willing to take to stay in the position. Puts can protect from first dollar (or after a specific loss if not at-the-money), but they have a cost and they expire requiring a renewal cost. Stops don't provide first dollar protection and have a corridor of loss potential, but the do not have a cash outlay and either do not expire or can be reinstated each time without cost. Both puts and stop loss orders provide forms of protection with different features, effects and costs.
    Oct 2 08:04 AM | 16 Likes Like |Link to Comment
  • The Dark Side of Stop Loss Orders [View article]
    Limits with stops are not appropriate in our view, if the purpose is exiting falling positions. Either you need to exit or you don't. If a stop is triggered by a falling price that goes below the limit, you won't get out.
    Oct 2 07:57 AM | 6 Likes Like |Link to Comment
  • The Dark Side of Stop Loss Orders [View article]
    No Free Cake -- good catch -- correction: we don't want be have positions that are more than 2% of DAILY dollar volume at the outside, preferring less than 1%.-- thank you.
    Oct 2 07:54 AM | 3 Likes Like |Link to Comment
  • Buy and Hold vs. Rebalancing Results [View article]
    Some people combine a calendar schedule for rebalancing with and even threshold, such as X% variation in the price of key assets, to trigger a rebalancing action. Rebalancing, of course, chases prices down and scales out of rising prices. If a serious enough event or eventuality exists, standing aside for a while is the resort of some as well.
    Sep 16 11:51 AM | Likes Like |Link to Comment
  • Now It's Truth or Consequences for the S&P 500 [View article]
    That's really my point. Unless the "neckline" strongly pierced, the price would likely fall significantly, making it a "triple top" -- probably should have described the even of falling off as creating the triple top -- that's why its "Truth or Consequences" time.
    Sep 15 07:00 AM | 2 Likes Like |Link to Comment
  • Now It's Truth or Consequences for the S&P 500 [View article]
    Sometimes price patterns become self-fulling -- patterns like this tend to have many followers. More importantly expectations about a more business friendly government post-election could at least temporarily raise market levels. We agree that earnings estimates are coming down and the macro doesn't look so good (but not as bad as before for now), but the pain associated with that may be pushed down the road for a while.
    Sep 14 11:47 PM | 3 Likes Like |Link to Comment
  • Key Stock Index Short-Term Re-Entry Price Minimums [View article]
    David, I agree that we use trend following, but want to point out also that we only follow trends in fundamentally attractive securities. We feel a blend of sound operations, valuation and price performance is a good way to go. Some trend followers will own anything that is rising, but we will not. We first select securities for operating, valuation and yield considerations, then select among those that are in rising price patterns.
    Sep 6 10:36 AM | 1 Like Like |Link to Comment
COMMENTS STATS
1,007 Comments
1,413 Likes