A Profitable Week

It has been a great week so far. I am not sure how to build on the current successes as they have exceeded even my most ridiculous expectations as I have hit my portfolio goal for 2005 only 3/4 through the year. I am not anxious to quickly ratchet up the leverage again - however I do want exposure to the metals again - the question of course is in what time frame.

I am thinking of going out much further this time to maybe December or January. The question is also at what buypoint? At a minimum - I am forcing myself to wait until after the Fed Meeting in order to purchase anything metals related. I have been watching NCTY very closely and am thinking of buying my first 100 shares. Ultimately - I am hoping to build a position in this one of at least 300 shares, but hopefully more. The question again - is at what pricepoint.

Because I am very negative on the broad stock market - including tech over the next few months - it may be wiser to wait for the Nasdaq crash to begin - as it would be expected for NCTY to trend closely with the other internet/tech related stocks. At that point - it may be possible to find a more attractive buy point in the $14-15 area as opposed to the current $18-$19 range.

On the other hand - why does $3 matter when we are discussing a stock that I sincerely believe could be in the $50-60 range by next spring. That is a tougher question to answer - but I basically guess that it has to do with the methodology and mechanics of the trade. I have been focusing a lot on improving my mechanics - re: charting, entry/exit, holding the position and I have only found that I have much, much more to learn.

The good news is that as almost all of trades have a basis in the fundamentals I have often been able to anticipate a bullish trend before it actually materializes. This is a true talent - although in my case it might have been luck as the run has been exceptional as of late. The majority of traders wait until the actual trend is in place and then use superior trade mechanics to make money on the intermediate run. This is because intuition often proves false.

As shown even in the very successful Newmont speculation my investment dropped by 40% the day after I bought it. A smart trader might well have cut his position there, or instead waited until the positive trend had been firmly established re: stock above $40. I have been reasonably pleased with my entry points as of late - however, what I have continuously overlooked is the proper exit. This is something that I truly do not understand and I think that is partly because I have not set clear expectations about each trade - either in dollar terms / % terms / or time horizon.

This weekend I will try and pull out a few of my technical analysis books re: the trade exit so that we can discuss a few of the basic ideas.

During the 6-day trading hiatus leading up the Fed meeting I also hope to post some discussion about my beliefs re: the coming shakeout in the economy and stock market and the optimal way to position your capital during a potentially difficult period. I believe we have a heads you lose / tails they win scenario coming up - regardless of the Fed decision - rates drop, same, or raise.

In the meantime - there's nothing wrong with cash.

Regards,

BG