Replies to post #324 on Systematic Investing Group (SIG)

[lostcowboy]

Hi Leap,Thought I would throw a book at you " The Strategic Investor by Douglas H. Bellemore. He says that Traders should not average down, due to they are operating on the believe that they can predict short-run market trends. He goes on to state that most investors believe in averaging up. He goes on to say that on averaging down, one should not make any new commitments until the stock has declined 45%, and has a base area for six months, if the stock goes down again, one should wait until a drop of 55% from the peak and a new base, if it drops again 60 to 65% and a new base. That starts on page 372, on page 374 is a example. A stock one is interested in drops to 40 to 50% and forms a base one would invest $1,500, the stock declines to 50 to 55% and forms a base at least one year from first commitment, you invest $3,000 more, the stock drops again to 60 to 65% and forms a base at least a year from the last commitment you invest $6,000, for a total of $10,500 invested in a stock that has dropped 60 to 65% from its peak. this is over a period of about three years, and each time you invest you re-evaluate the stock to determine if it is still worth investing in.

You said My latest thought flows to Mysts MRI. An interesting concept. As I have pointed out to Myst MACD should be replaced by PPO for various reasons. I would be interested in the reasons, please refer me to the message in question, or could you repost your thoughts here.
You said In other words %R and Stochastics are essentially the same. I could not agree more, one should use one or the other. Just as a 14 period RSI has an R squared of .98 compared to a 28 day ema. I know a little bit of a RSI and the 28 day ema, what is the r-squared and how do you calculate it and use it.

You said So he is essentially measuring the same thing more than once which hoses up the weighting. could be true, check out http://www.fundpilot.com/commentary/scottmc/scottmc20000807.html
Scott is part owner of stockcharts.com, so he was able to keep and repost his commentary on http://www.fundpilot.com/ be sure to wander around the site, lots of good info.