Today I’m pleased to bring you the latest installment in our Dick Davis Digests Contributor Interview Series. This time, I asked some questions of Shortex Market Letter Editor Joseph Parnes, who is also president of Technomart Investment Advisors.
Parnes’ newsletter is notable for its brevity—in every issue, he recommends 14 positions, seven long and seven short, in just a few pages—and you’ll see the same trademark succinctness in his answers below. Here’s what he has to say about investing and the market today.
Chloe Lutts: When did you start publishing the Shortex Market Letter?
Joseph Parnes: Shortex Market Letter was established in 1973, and has been in continued circulation since 1991.
CL: Why did you decide to start the letter?
JP: The era of the early 1970s was the malaise of triple ‘I’s: Inflation, Interest rates, Israel. The introduction of Shortex met positive reception.
CL: What is your investing system or philosophy?
JP: Not following the herd has been the hallmark of my investment philosophy. Being contrarian has been a plus.
CL: How do you pick the stocks recommended in the newsletter?
JP: A combination of company fundamentals, the market pulse and stock technicals, with an emphasis on relative strength and money flow.
CL: What are a few of your favorite stocks to buy today?
JP: Myriad Genetics (MYGN), 3-D Systems Corp. (DDD), Google (GOOG), Visa (V), Ford Motor (F), Apple (AAPL) and Church & Dwight Co. (CHD).
CL: What’s one important piece of advice you think more investors need to hear?
JP: In today’s environment, trading is the hallmark of high-frequency traders, not for the average investor, so patience and a distant time frame is a must.
CL: How distant are the letter’s average holding periods, on the long and short sides?
JP: On the long side: six to nine months. On the short side, three to six months.
CL: What do you see as the biggest challenge in the market right now?
JP: Computer trading by the high-frequency traders (hedge funds, arbitragers, market makers). Executing “sub quotes” and naked short-selling, which can cause mini crashes.
CL: What are sub quotes?
JP: Sub quotes is a terminology used by high-frequency traders where, in rapid trades—many times in nano seconds—the actual trading is not consummated. The traders can benefit from the spreads of seconds and complete transactions with no execution of the orders.
CL: And what kind of problems does that cause?
JP: In the past, speculative trading has caused excessive impairment resulting in drastic declines that carried the Dow Jones average down 15%-22%.
CL: That does sound problematic. Before you go, let us get to know you better—what else do you like to do besides investing?
JP: Personally, I play tennis, and ski in the winter.
CL: Thanks, Joseph!
Wishing you success in your investing and beyond,
Chloe Lutts
Editor of Investment of the Week
