Posted by: jhamon | June 13, 2009

Why Is Tech Up? observes that tech companies are cutting jobs in the Bay Area, with nearly 2,000 lost year to date in 2009.  Interesting then that our current portfolio (see Current Portfolio Themes) is so heavy with tech names. 

Possible explanations:

  1. Job cutting “right-sizes” companies’ P&Ls towards profitability, or
  2. The macroenviroment isn’t so bad as it seems and a turnaround is coming, or
  3. We’re on the verge of some presently non-obvious tech investment cycle, or
  4. [Fill in the blanks with your own idea].

This systematic trader’s reactions to these proposed explanations:

  • Who knows? 
  • Who cares?
  • What practical trading difference does having an investment thesis make  (despite the obvious entertainment value)? 
  • Does a thesis tell me where to enter? 
  • Does an investment  thesis tell me when am I wrong (exit at loss)? 
  • Does it tell me when the trend is exhausted and it’s time to sell (trailing stop)? 

Instead, we systematic traders simply focus on present reality – namely, that the FUNDAMENTALLY STRONGEST stocks our model can find AND which are currently TRENDING UP are TECH STOCKS.  Therefore, we buy them and hang on them until they stop going up.  Simple as that. 

Why is tech up?  May as well ask “why is the sky up?”  All we need to know is that it is.

We’re back to Richard Dennis‘s point that there is less to trading than meets the eye.


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