Consider from this weekend’s Barrons:

“Margins of the sort Google generates invariably attract new entrants, so it’s no surprise Microsoft wants a piece of the action. But the process invariably squeezes margins as companies spend to grab consumers’ attention. J.P. Morgan estimates Google itself will boost research and development spending 60% and sales and marketing expenses by 54% next year. If Google doesn’t continue to keep generating top-line growth, or R&D and marketing expenses increase even more, margins obviously would suffer. Whether Google’s inside shareholders will stick around to find out is another question. Lock-up restrictions on 270 million shares will be lifted within six months of the August IPO, including nearly 40 million later this month. CNET reported last week that the Web developer who drew those cutesy holiday logos for Google’s home page registered to sell 2,495 shares for a profit of $489,000 at recent prices. If you saw dot-com stock gains go up in smoke all around you four years ago, what would you do?”
Barrons

What you should do is trade the trend. Don’t try and predict the trend, just trade it either up or down. If you get out now — what if the share price doubles? Forget price targets, they are not wise. Ride the trend as high as it can go, but just make sure you have an exit plan or go short plan at some point when the trend ends.

Number of days between Red Sox World Series triumphs: 31,459.

The fabled mathematical concept, PI (of PI R SQUARED fame): 3.14159.

Source: ESPN.

People often ask, “can I invest with trend followers through my retirement program?” Good question. The short answer is that it depends on what kind of retirement program you have. For example, Lincoln Trust offers flexible programs that go well beyond the “standard issue corporate retirement plan”.

Along the lines of “retirement flexibility”, consider:

“For a quarter-century, a Boston inventor has been obsessed with a single idea: an innovation that would give millions of American workers the chance to borrow their own money from their 401(k) savings plans using a new kind of credit card.”

Read article here.

For those that continue to be “long only” or said more directly “buy and hopers”, the following white paper is food for thought: Long Short White Paper from Deutsche Bank Absolute Return Strategies.

Thought about alternative markets recently? Consider: ‘The Futures of Risk’ White Paper from Hedgestreet.

A good map showing exchanges and trading growth across Asia.

John G. Miller’s The Question Behind the Question is a great, quick read about personal accountability. Do you ask “why” or “how”?

Winners are different: read PDF report.

“There’s a strong human tendency to mull over the past and think that what has happened in the past has a strong impact on what will happen in the future. We tend to believe that we can learn from our past mistakes, and we often do. But there are times when there is little to learn, and it is useful to move on and see what happens next, instead of unnecessarily mulling over past losing trades that were just a fluke. Seasoned traders warn that it is not wise to get bogged down by a series of unexpected losing trades that were just a matter of market “noise.” It makes no sense to take things personally or to place more significance on a setback than is warranted. It is important to learn to pick yourself up after a setback. Think optimistically. There is always a new play to develop. There’s the next pitch, the next opportunity where you can come out ahead. You can’t let a series of losers ruin what could happen next. Athletes have known this for quite some time. Whether it is tennis, football, losing a sale, or trading, it doesn’t make sense to let yourself get stunned and stagnate. It’s better to just say, ‘Okay, I made a mistake, what’s next.’”
Innerworth.com

The last few months have seen various reports of hedge funds changing their strategies to “long only”. Long only? Exactly, just another way to say buy and hold. Long only trading is limiting. Consider the wisdom of avoiding the “long only” constraint:

“The long-only constraint is so automatic in investment management that, often, we don’t even think about it. Yet this pervasive constraint can dramatically reduce efficiency and induce small stock biases — and these negative impacts increase with active risk. In fact, the advantage of long-short products [for example trend following trading] is the avoidance of the long-only constraint.”
Ronald N. Kahn
Canadian Investment Review

Buy & hope, buy & hold or long only — it’s all the same thing. The best traders do not just “buy”. The best traders enter markets, long or short, always with an exit plan. If you don’t have an exit plan as you enter, how do you know to ever get out?

Read PDF story for more information about the long only debate.

Some thoughts about affect, reason, risk, and rationality by Paul Slovic, Melissa L. Finucane, Ellen Peters, and Donald G. MacGregor.

Download PDF report now.