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August 31, 2006


Reacting to Each News Release Like Pavlov’s Dogs

The Unhappy Life of News Junkies, by David “I already have my yacht” Dreman

Hedge fund managers, day traders and swarms of other quick-buck types trade instantly to get the edge from news flashes. Maybe you can make money trading on these moves, but only if your transaction costs are nil and your computer is ten seconds faster than every other trader’s. Neither condition holds.

Stay away from the trading trap and stick to fundamentals. Buy stocks that are cheap and whose outlooks are good. Ignore the weekly wiggles in prices. Think of long-term risks and long-term rewards.

[Use BugMeNot to log in to Forbes… not only does Forbes stick ads within the text of their articles (an unforgivable breach of etiquette), but they also require “registration” at their site: how very 1998. Pick up the clue phone, you fools! Hello, Bono, it’s time to make some changes!]

This entry was posted on Thursday, August 31st, 2006 at 10:08 am (utc+8) and is filed under Trading and Investing.

2 Responses to “Reacting to Each News Release Like Pavlov’s Dogs”

  1. DAYTraitor said:
    September 1st, 2006 at 12:05 am

    I assume the chairman subcribes to this philosophy?
    I find that news anticipation can get me some good trades. Buy on a dip and wait for news.
    Works well with miners and energy companies for me, good way to make a quick buck, since trading supplements my income, i do it when i need some cash.

  2. Gemma Star said:
    September 1st, 2006 at 5:27 am

    I’m new to investing and trading. (Barely a year.)

    Here’s something that seems to work for me in my IRA: I look for stocks that are reliably volatile over limited time frames. I track several. I buy on a dip; usually sell when stopped out. If a stock stays in a certain range for a while (SIRI has done this), I finally just sell and move into one of the other stocks that has dropped but is beginning to move upward again.

    I’ve bought and sold SIRI many times, usually holding it about 5 to 8 trading days but sometimes longer. Ditto LAZ and FNSR.

    Next, I plan to learn how to trade options so that I can add calls to my repetroire.

    But now I’m going to follow DAYTraitor’s example: buy the energies and miners on dips and…wait for the news! It always comes. Thanks for that tip DAYTraitor.

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