I'm curious if mrmarket or anyone who prides him or herself on fundamentals has ever been caught in an Enron? I ask because I'm curious if how in depth their analysis is on a particular company. Fundies should not have been caught in Enron; they should have seen warning signs on the cash flow side that would've sent warning flags up. Then again it was the bubblemania and if that monkey in that Williams commercial could trade energy, hell, this must be an easy business.
The thread is not devoted to Jack. And I agree that it should be in the Strategy Trading forum; however, the potential for controversy was so great imo that I was not going to ask another moderator to clean up a mess that I can clean up myself. The number of views the thread has received speaks for itself. While that number doesn't necessarily reflect worth, it does reflect interest. Here is the model as provided by MrMarket. It doesn't require deciphering.
A thread entitled The Jack Hershey Stock Trading Method is not devoted to Jack? Be fair, ial. If you're going to put Jack under your wing, you ought to put MrMarket there as well. Bragging about meats and cheeses is no more obnoxious than bragging about 40 books and close personal ties to the White House. Personally, I don't think either one of them is worth an afternoon. But this differential treatment is more than a bit strange.
You'll find none of that 40 book stuff in the Jack Hershey thread, well except maybe the one in ChitChat where it belongs.
My comments. Your last paragraph is pompous. Insofar as the premise you pose, any sell off, on bad news or fundamentals, is a sell off, no matter the reason why. If you're in long, why not get out with either a small loss or a bit of profit? Put the money to work elsewhere where a stock isn't declining. When and if the price recovers, you can always enter again, unless you're in someplace better. Doing so, there is no cost of opportunity lost plus preservation of capital. It's O'Neil who recommends setting an 8% loss as a stop. And there's a specific reason why he does. But there's much more to setting and using stops than that. So much more that it's another topic. Suffice it to say, I wouldn't call O'Neil's 8% stop loss rule anywhere close to how best to use stops.
There is some truth to what Mr Market says and that can be said regardless of your style. In the early part of a trade, you have to know when to wait for an adverse move to turn around and when to get out. I would say that most of my losses since I started trading were whipsaws. I noticed that if the market moves immediately against me it's better to wait for it to come back (unless I am playing a reversal, which I shy away from usually especially on the short side) however if it moves quickly in my favor then comes back then I must get out because it's probably reversing. Also in Forex cutting losses too quickly (ex. less than 50bps in EUR/USD) is just going to cause losses after losses. As for the 8% stop loss that Oneill recommends, I think a lot of break out stall and come back before really moving up again so you must get whipsawed a lot with his method unless you are in a raging bull like now. Keep in mind that he has a lot of followers buying at the same time too.
This has been stated a number of times by a number of people but it's only partly true. Yes, O'N does recommend setting an 8-10% stop below whatever price should have been the entry price (NOT the price one actually entered at). BUT. This applies only to the initial loss-limit. Nowhere does he say that one should maintain an 8-10% trailing stop loss.
In a bull market, staying long during corrections will clearly make more money than selling out. The obvious question is how to do that whilst avoiding getting screwed when a bear market comes along.