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Interview with Maurice
(November 28, 2002)
 Maurice
and his wife Monika How
he started in the stock market and in technical analysis:
He got interested in the stock market because when Marcos was leaving
office in 1986, everybody was talking of the market. His father, who was
an investment banker, introduced him to
Choy Lorrayes and Ramon Arnaiz who were then the principals behind
Citicorp Scrimgeour Vickers.
He made his first trades (AC & SMC) in 1987 while still in second year
college. He
started to learn Technical Analysis from Marc Faber in 1991. In February of 1994, he
and his Father founded IGC Securities, Inc.
At this point, he also began reading TA Explained by Martin Pring and
ordered a copy of Computrac from Harry Liu.
His
Trading
System: His trading system
is basically 25% fundamentals, 75% technical. He uses fundamentals to choose
stocks, while he uses technical to time his ins and outs. "I
am of the Martin Pring approach, where Pring says that Technical
Analysis is the art and science of identifying changes in trend early and when you identify a change in trend, you open an investment position
and you maintain it until the weight of the evidence tells you
the trend has reversed." He
uses patterns, trend lines, Japanese candlesticks, moving averages, RSI
and Fibonacci retracements. With
regards to moving
averages, he uses a 20 and 60-day crossover method to confirm the trend. With
regards to oscillators, he uses a 14-day smoothed RSI. He
is generally a position trader and his outlook is medium-term.
"The way I think about the market here in the Philippines is that every
year there are two or three good moves. By good moves, I mean, the
market will generally move 20-30%. If I'm in and I catch the meat of the
move, I'm doing ok. The rest of the time I'll hold cash.
Then again . . . 2000 and 2001 have really put this theory to the test
because we’ve only seen one good move per year . . . maybe the market
will “normalize” after the 2004 elections." When
asked how he finds an uptrend? He says, "a trendline violation of at
least three months old, preferably 6 months old,
accompanied by a 60-day moving average crossover. If all this happens in
the context of a bullish divergence, so much the better." How
he places his stops: 2% risk to
entire equity for each position He is not afraid to buy a breakout since he
will simply lessen the number of shares that he buys so as to arrive at
a risk to the position of not more than 2% of his entire portfolio. How
he stock picks: "As far as stock selection
is concerned, because of my experience with Marc Faber, I am a bit of a contrarian
when it comes to the fundamental side. I look for things that are just
severely beaten down but still retain value." Portfolio
Management: "I have no more than 5 positions open
at the same time." Position
Sizing: For example, in a
reverse head and shoulders formation, he would place 50% in the bottom of the right
shoulder and 50% on
the breakout. His thoughts
about the finding the Holy Grail: "There is no Holy Grail. I have enough
'bukol' in my head to find out there is no Holy Grail." "I
used to be a system trader, now I am
discretionary, since I found out there was no one perfect system. Over time, whenever a system would give me a signal, my intuition would
start to tell me not to follow it and this would start to be right.
After you spend time in the market, you develop your intuition...Its
funny, I started out with Technical Analysis just looking at patterns
and trend lines, then, when I thought that wasn't good enough, I did a
lot of momentum indicators. It came to a point where I had the price
chart on top, and then like 5 sub-sub screens below with 5 different
indicators. It just drove me nuts! And then, I started to simplify,
simplify and simplify and now I'm starting to come full circle and I'm
ignoring the momentum and moving average and my primary signals are
really back again to trend lines and patterns as my primary signals. If I slap on indicators,
they are just there to confirm. So, I'm going back to the basics
again."
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more about Maurice |
