DAYTRADING: The Highs and the Woes
[Ed. note: Kramer, lazy as writers tend to be, told me to run a "best of Kramer" column. Ha, now there's an oxymoron. So I chose one he penned as the market was bottoming last spring.]
Such a week in the markets! I was mentally exhausted and eager to get to my regular Saturday morning session with doc Kronkite, shrink-to-the-traders. He’s a specialist you know.
I was greeted warmly by the doc’s long-legged and lovely receptionist, Thelma Tushbumper. “Oh, I’m so glad to see you,” she cooed. I smiled.
“Doctor is in distress,” she said, one tear slowly rolling down a milky white cheek. “I do hope you can help.”
Me help the doc? Unlikely. “I shall do my best,” I assured her. I’ve always been a sap for a lady in distress.
Miss Tushbumper took me by the hand and led me to the doc’s office. She kissed me gently on the cheek, her eyes pleading that I work some magic.
The doc was lying on his lumpy leather couch, in my spot. He was sobbing uncontrollably.
“Doc, what is it, what’s wrong?” I cried.
He blew his nose, sat up, said, “It’s that no good Mendlebaum. I could strangle him.”
“You mean Mendelbaunm-the-fund-manager?” I asked.
“That’s the one, that’s the bum.”
“But doc, doesn’t he handle your investments?”
“No more. Did you see him on CNBC Wednesday.”
“I don’t watch CNBC doc.”
“Well, he was on. Maria interviewed him. He said the market looked terrible, that all stocks should be sold. So I sold everything.”
“Mmm” I mumbled.
“Ten minutes later the market started to move up. And up. And on Thursday the Dow was up almost 300 points, the Nasdaq was up 61 points! I sold at the bottom.”
“Gee doc, that’s terrible, I said.
“Terrible is when he put me into internet stocks three years ago. Terrible is when he put me into tech stocks two years ago. Terrible is when he kept buying them for me as they dropped and dropped. Into the poorhouse he’s sending me.”
“Gee doc, that’s awful. I don’t know what to say.”
“Say you’ll teach me how to be a trader; a day-trader,” He said.
“Gee doc, trading isn’t easy. It involves hard work, long hours and can be very stressful.”
“I can handle stress,” he insisted. “I’m a specialist you know.”
“I know doc. But there’s a lot more.”
“Talk on me, I’m all ears.”
“Well doc, you have to know how to pull the trigger,” I began.
“Pull the trigger? Guns I need?”
“No doc, pulling-the-trigger is a term we traders use. It means buying or selling quickly, when we get a buy or sell signal. Or when a trade goes wrong.”
“I can do that,” the doc insisted.
“And you have to be able to take a loss.”
“I’m an expert at taking losses thanks to that no good Meldelbaum.”
“And doc, you can’t hesitate when it’s time to sell short.”
“What means sell short. Never heard of it.”
“Well doc, it’s something we often do to profit when we think a stock or the market is going to drop.”
“Impossible!” he shouted.
“No doc. See, we sell a stock or the QQQ’s or the futures first, then buy ‘em back when they drop in price. It’s just the opposite of buying and then selling. “
“Does everyone sell short?” he asked.
“No doc, but many traders do.”
“Ok, I can do that. What else?” he asked me.
“You’ve got to put some stop-orders in when you put on a trade.”
“You lost me there. What’s a stop-loss order? he asked.
It’s an order that takes you out of all or part of your position if the trade goes against you,” I replied.
“When was this invented?”
“It’s been around for some time doc. For the novice trader it helps to avoid becoming emotional and stubborn when trades go wrong.”
“So how come that no good Mendelbaum never told me about this invention?” he cried.
“Gee doc, I don’t know. But there’s more.”
“Talk on me, I’m listening.”
“Well, sometimes it’s good to have a trading partner and be in a good trading room.”
“You have a trading partner no? That little guy who speaks with a clipped British accent, Doodlegrunter. I don’t think he likes me.”
“That’s Dortmunder doc.”
“And what’s a trading room?” he asked.
“It’s a place where traders gather every day to share trading ideas,” I told him.
“And you’re in this room every day?”
“Sure doc.”
“How many traders are in the room?”
“Six doc.”
“What do you do, rent a room?” he asked me.
“No doc, the room is on Paltalk, in cyberspace.”
“Is that anywhere near Secaucus?”
“No doc, you get there via the internet.”
“Do I have to buy an internet stock to get there? I don’t like internet stocks.”
“No doc, no internet stocks,” I assured him.
“Anyone I know in this room? I don’t want to mix with riff-raff.”
“Well doc, there’s Plugger and Jorge, ML, Goldi, Bob and Zorro.”
“Zorro? Zorro trades stocks?” he asked.
“Indeed he does doc. Best bear-trader I’ve ever known.”
“And the others?”
“All pretty good, experienced traders.”
“Ok, I want to join your room. Is it expensive?”
“No doc, it’s free. But you should get some charts.”
“What’s a chart?”
“We can show you doc. We use ‘em to trade. They’re pretty helpful. We’ll work with you.”
“Good. And with help from CNBC I’m certain to do well.”
“No doc, no CNBC. They will not help you.”
“No?”
“No.”
“Ok, wonderful. I’ll be there on Monday. Some bagels I’ll bring. And Danish.
“That would be fine doc.”
“And I’m going to fire that no good Mendelbaum,” he cried.
“Ok doc, see you Monday.”
Lee Kramer
Copyright 3/10/03
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