The Deipnosophist

Where the science of investing becomes an art of living

My Photo
Location: Summerlin, Nevada, United States

A private investor for 20+ years, I manage private portfolios and write about investing. You can read my market musings on three different sites: 1) The Deipnosophist, dedicated to teaching the market's processes and mechanics; 2) Investment Poetry, a subscription site dedicated to real time investment recommendations; and 3) Seeking Alpha, a combination of the other two sites with a mix of reprints from this site and all-original content. See you here, there, or the other site!

02 May 2006

A hypnagogic myoclonic twitch

Is it not always so? The unsolicited and presumably informed comments stated elsewhere in re to this post about Rackable Systems/RACK is that he or she saw it first.

Yawn. These readers are seemingly unaware of what I was trying to betray -- specifically, what draws my attention to this stock vs that one. I am more interested in what will happen, not what has happened. Investors do not make money by buying what has happened, but what will happen. (The profit vs prophet syndrome.) When the moment to act is before me, I care only for what I do in the markets. The actions of other investors are portrayed already in summation in each daily bar, and those decisions in sum are the reflection of their due diligence, from both professionals and amateurs.

And, of course, there is the small fact that I believe RACK shares have need to decline first into a new intermediate term base. I thought I made that point clear, but perhaps not. I expect such action, and invest accordingly. I see(k) a specific pattern to emerge in bars that have yet to occur. And as many of you know (largely due to me constantly repeating myself! :-) I do not seek market action to ratify first my perspectives before investing; instead, I establish my positions knowing how patterns tend to build, to create themselves. The sole deterministic factor when investing is your behavior; how you act and react to each new signal. And that, I believe, is the Holy Grail of investing. Too many investors instead buy and sell on a wing and a prayer.

The foregoing is as true for Rackable Systems/RACK, as it is for Google/GOOG, Apple Computer/AAPL, and Teva Pharmaceuticals/TEVA, et alii. Place each pattern within its continuum, keeping in mind your time frame, and recognizing that all true patterns are replicable in all periodicities.

-- David M Gordon / The Deipnosophist

who's online