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Stocks by Jonathan Hoenig (Author Archive)
Winning Trades Sometimes Require Patience
Yet even the most talented investors go through losing periods. Eddie Lampert, Bill Miller and Jim Simons, for example, are just a few of the highly regarded and successful investors who have posted severe losses in recent months. Although I don't much believe in their respective styles, I can empathize with the reality of volatile markets: We'd all love an investment that always beats the averages and never has a losing month, but to my knowledge, it simply doesn't exist.
Whether you pick your own investments or allocate to a number of managers, from a portfolio perspective one solution to dealing with the inevitable losing spell is to stagger your exposures and strategies over several months. I call this diversification by time. By trickling out capital over an extended period instead of at one particular moment, you can essentially limit your risk to any one particular market cycle. As some ideas, like precious metals, are starting to wilt, others, like Japan, are just beginning to bloom. Your entire capital reserve isn't allocated based on one day's analysis.
That analysis should be primarily centered on the price action of the securities themselves. To that end, I look at a lot of charts, not for obscure mathematical calculations, but simply to get a broad sense of the market's major directions and trends. So I'll pull up motion-picture stocks like Regal Entertainment Group (RGC) and Cinemark Holdings (CNK) to see how they're weathering the storm (not well) or check in to get a sense of how the utilities like Nicor (GAS), NSTAR (NST) and Northwestern (NWE) are performing (much better). It's my belief that, at least for new money, attention should be focused on areas of the market that are outperforming. Essentially you water the winners and let the losers die in the vine.
Box-Office Flops
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One thing we Europeans (I"m an Englishman living in France) so admire you Americans for is your willingness to stand up for personal liberties. There is nothing to recommend smoking, but it is not the government"s job to protect us from the consequences of our own actions, as long as nobody else is harmed. If a bar wants to allow smoking, and if employees and customers are prepared to accept the risks, it is not for any Big Brother to prevent us. They should stick to education, not prohibition. And they"re not very good at that. Most of us smokers don"t know that our habit will end up killing about half of us. Give us that sort of information, let us decide, and then for heaven"s sake leave us alone.
Hoenig should stick to trading advice and not meddle into social/medical issues. Smoking is a serious medical problem and is really a social disease. It should be illegal. People who are addicted to nicotine need a strong incentive and social pressure to break the habit. A nicotine addiction is more difficult to break than cocaine given that it is a mix of physical and psychological addiction (cocaine is mostly psyc.).
It"s clear by the thinness of this article"s content that Hoenig is just using it as an opportunity to continue his personal diatribe against anti-smoking regulations. Doesn"t SM have editors to filter out junk columns like this?
And yes, unless you"re a hopelessly naive conservative, the government"s job is give us incentives to do the right thing when providing information isn"t sufficient. Especially when your right to do something self-destructive potentially hurts other members of your family and costs me money.
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Just what is the "right thing" that gov"t should force upon us? it seems to be in te minds of liberals who want to enforce their socialist whims. The cost of med care(for smoker, non seat belt users etc) is a problem of socialism, not of right or wrong. If we just let the smokers die off, the problem will end.
I think it would be "right" to amend the constitution to only allow taxpayers to vote--particularly on tax issues. Is that "right" for you leftists?