One Question Interview with Nusair Bawla

August 4th, 2006

Another One Question Interview, this time from Nusair Bawla. Nusair is an individual investor with an interesting style that we learned about in his full interview. He has recently started a blog called Tips are for Waiters.

Here’s the question for the first round of One Question Interviews:

What trading lesson(s) have you learned from the downtrend that started in May?

Nusair:

Simply put, I have learned to trust my method more now than ever. Around the beginning of April, I was up 41.2% for the year and I was sitting on 80% cash. Most of my screens were not coming up with any decent candidates so i was sitting on an unusually high amount of cash. Having around 40% cash is not unusual for me, but this was high. As I was seeing others coining money around me, I thought I would loosen my screens a bit to generate some more ideas. That was a mistake as I started to buy stocks in companies that did not fit my criteria. Fortunately, I did not buy too much and I ended April with around 50% invested, which is when the wheels came off this market. Most of the sub par stuff I bought due to my loosening of criteria immediately plummeted and I was stopped out for some small and some not so small losses. Though my losses were not too bad ( I am still up around 36% for the year), the lesson was learned. I should stick to what got me here in the first place. I exhibited a lack of discipline in not following my own stock selection methods and I paid a hefty tuition for it. In the future, I will simply trust my own criteria and my screens and will not override them.

Since this downtrend has started, I have been in mostly cash and have not done a whole lot other than make very short term trades (long and short). Since I have not been too active I do not have too many stocktickr stocks in my list either. Once my screens start to give me some decent picks, I will start to add longer term positions. In the mean time, I have started a blog and am doing some initial digging into starting a mutual fund of my own. BTW, I am by no means a computer whiz so do not expect too much from the blog just yet. I am still feeling my way around and learning everyday. Any suggestions will be very helpful.

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