Visually Compelling TA

In Strategy (Chapter 2 of Garry Kasparov's How Life Imitates Chess) the author describes strategy as abstract and pertaining to grand goals. By contrast he describes tactics as conditional and opportunistic. Similar contrasting words can be used to distinguish investors from traders. Investors are seeking a lofty goal such as long-term growth and the traders are opportunist with regard to trading imbalances often with little thought to a companies underlying business. But this contrast somewhat misses the mark as what investor does not enter and exit their positions without some measure of opportunistic considerations? And what trader does not have genuine long-term goals with respect to their trading capital? Indeed Kasparov goes on to say "it take both good tactics and strategy to be successful."

My SLO 2 strategy is: Identify and invest in three thematic industry group ideas at any given time. And keep enough cash in reserve to nibble into a fourth theme while unwinding positions in one of the three should rotation be necessary. The thematic idea must have the characteristics of an articulable compelling story. Individual companies must arguably fall into one of the compelling themes, have attractive fundamentals, and be traded with careful attention to its technical characteristics.

Playing chess involves making calculated moves to affect the position of the board several moves hence. Investing involves making calculated trades to construct a portfolio with desired content. Trading is the method of carrying out a portfolio strategy. "If you seize the opportunities that your strategy creates, you'll play your game like a Grandmaster." In the next chapter Kasparov discusses strategy AND tactics working together.

Comments: View Comments |  Wednesday February 20, 2008