The Man Who Buys CrashesQ: So it’s kind of like a game of hot potato?
A: Yes, you are buying in effect extreme fear and then there’s a
point where that fear tends to bottom out and then maybe a little
optimism comes in and when that happens you get out. When you
get the opportunity, there are four or five distinct and different
type of behaviors in these crashes. And from experience you can
see them on the charts if you’re watching a one-minute chart. But I
consider myself an omnivore trader. I do use many, many different
methods including some long-term trades like in oil/gas stocks.
From 2003 and 2004 until now, I’ve held positions sometimes for
nine months. So I do some pure value investing and I throw trading
on top of that as I watch the stock a lot and get to know it. I get to
see the everyday things. So I might buy in and sell out 5 percent of
the position during the day from these intraday patterns that I’ve
noticed.
Q: How much of a bounce back do you look for? Would you
unload the position at 2 to 3 percent profit?
A: It if keeps having momentum, I’ll hold it and watch it. But
it’s actually less than that. You can imagine how hard it is to follow
four or five stocks in a crash.
Q: Is there a cadre of stocks that you follow whose patterns and
fundamentals you know quite well?
A: Yes, there are about five to seven stocks and that will change
year to year.
Q: And you’ll be in and out of those stocks, if not on a daily basis,
then certainly once or twice a week based on this kind of a thing?
A: That is correct. If I really like the stock, I’ll hold it. If I just
like the technicals, then I’ll get in and out. I trade different stocks
different ways.