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Longs will crush the shorts

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August 14, 2009 – Comments (7)

In real life, and in this game, longs will crush the shorts.

Take for instance, my pick on IRE. I picked at 1.98, and it is now over 11.00. At this point, if it goes up just a few pennies, i make big points. I mean like 10 points for every 1%

Now if it goes up in five years, (yes i know it may bomb) to say..  .. it's glory days of 40% above the S/P from here, 80% above, the S/P (5 year chart) i will be making like 100 POINTS off ever 1% above the S/P !

There is of course the person to person skills, but in the end; shorting can only give so much. . .and long can give forever.

Fools like Ultralong, who really know how to play, and got in at the 'bottom', will have thousands of points in each pick eventually.

PS yes i know that you are all better than me at this game, so if you can make this more clear to me, please do.

-solaris

7 Comments – Post Your Own

#1) On August 14, 2009 at 11:23 AM, chk999 (99.97) wrote:

This long term outperform where a stock goes up over years and you make huge points when it goes up a small percent (because your purchase price is so small compared to the current price) is what Dave Gardener refers to as a "spiffy pop".

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#2) On August 14, 2009 at 11:36 AM, globalsailor (46.64) wrote:

This makes sense. 

However if you notice, probably the biggest mistake you're making is trading too much in this game.  In the past three weeks I've closed one trade and outside of general macroeconomic trends I've started six.  You look like you're doing a few everyday.  Get no more than a couple a week and only make a judgement on them if you think they're very incorrectly priced or they have amazing growth potential (something harder to quantify).

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#3) On August 14, 2009 at 11:47 AM, SolarisKing (< 20) wrote:

Sailor, your are sort of right, and sort of wrong, about my picks.

I made a bad bet on timing the market a few months ago, and paid heavily for it. I'm learning a little at a time.

I had never had more than about 75 stocks before, and so i have been dropping a few a day because i want to get a lower number of picks so i can see it better. I have trimmed from almost two hundred to about 150, and want to go lower, but i also want my portfolio to go from short to long eventually, so i need to get out of the shorts. 

   And since the market has been long, and i was weighted the wrong direction, i have been getting slayed, So i had to add a few longs to balance.

I have been learning a lot, though i am still a novice, and many of the picks that i have greened recently i know better than my past patterns. For instance, MVG and JJG are  on AllStarPortfolio, and i have been watching it for months looking for an entry point.

So yes you are right, i have been moving a lot of pitches, but also i am trying to get into the less pitches mode. 

If that excuse makes any sense to you. . .      :-)

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#4) On August 14, 2009 at 11:47 AM, goldminingXpert (29.51) wrote:

Ultralong closed almost all his green thumbs. He's not drinking the bull kool-aid, you shouldn't either.

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#5) On August 14, 2009 at 11:52 AM, portefeuille (99.65) wrote:

That is part of what I wrote in comment #2 here tonight.

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An aspect that you do not directly address is that once a player has "active picks" with high score points he is not unlikely to experience quite a few greater than 1000 score point daily moves of his aggregate point score.

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#6) On August 14, 2009 at 12:07 PM, portefeuille (99.65) wrote:

Making "outperform" calls in the "caps" game is not necessarily a sign of "being bullish (on 'the market')" ("neither short-term nor long-term"). The benchmark in the "caps" game is pretty arbitrary.

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Is this metric based on the assumption that all monies not invested in equities are placed in an S&P index fund? Why make this assumption? Why not cash? Or an S&P short fund? Or grade A Colombian white? If the market is going to tank, I want to be short or I want to be out. I don't want to be long in equities that don't suck quite as much as the others. And if you devalue the scores of the market callers, how will I know who to listen to? 

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(from this post by zzlangerhans)

But now that it is there "outperform" simply means "perform better than the S&P 500 index". And this usually has to do with alpha and maybe with beta combined with a guess on the direction the benchmark ("the market") will move.

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#7) On August 14, 2009 at 12:12 PM, leohaas (32.35) wrote:

"Ultralong closed almost all his green thumbs. He's not drinking the bull kool-aid, you shouldn't either."

Have you lost it, goldminingXpert? As one of our top players, you surely know that green thumbs indicate an outperform against the market. It says NOTHING about the direction of the market itself.

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