Joshua Hayes Of Big Wave Trading
Is it the ideal life? Joshua Hayes is CEO, president, and founder of Big Wave Trading, a Maui, HI-based stock market advisory service. Hayes is a well-respected stockpicker and technician who combines fundamentals, psychology, and money management to trade professionally. Hayes also runs BigWaveTrading.com, an online stock market commentary and stock selection service for short- and intermediate-term investment strategies using Canslim and other strategies. Hayes has been a contributor to TeleChart, Realmoney.com, and TokyoJoe.com. He is currently a contributor to SeekingAlpha.com, iStockAnalyst.com, BestWayToInvest.com, StraightStocks.com, and InvestorsParadise.com. He also posts trading advice at MauiTrader.blogspot.com.
STOCKS & COMMODITIES Editor Jayanthi Gopalakrishnan and Staff Writer Bruce Faber interviewed Joshua Hayes on September 8, 2008, via telephone.
I am just not interested in opinions from other people.
I just go by the charts.
Joshua, how did you get interested in trading?
Early on, I used to go over to my friend's house and his dad would have the CNBC ticker on and I recognized two stocks, Iomega and AOL. There were others but these two really stuck out for me. By the time I was 16, I had developed a major passion for the markets and my father helped start me out by suggesting I read [what was then] Investor's Daily. He recommended it because his grandmother recommended it to him two weeks before she died. So I read it.
Intrigued, I got William O'Neil's book, How To Make Money In Stocks. It clicked with me immediately, and off I went.
JG: When was this?
This was back in 1996. Just a few years before, I was lucky because buying breakouts from "hot" charts were producing incredible results as I sold on the way up. I hadn't mastered down selling yet. I started at a time when if you bought breakouts at the right time from cups with handles, double bottoms would work. Basically, I got started by hearing names that I was used to, like Yahoo, Iomega, AOL, and then seeing these gigantic rises. I wondered what made these stocks go up so much. Then, after reading books like How To Make Money In Stocks, Reminiscences Of A Stock Operator, and How I Made Two Million Dollars In The Stock Market, I decided that the breakout method to the upside and downside was what I was going to use. That is what I use to this day. In bull markets, I buy stocks that trend above the 50-day moving average with the 50-day moving average above the 200-day moving average, and vice versa for short. I never buy value stocks or stocks falling. I never buy on the way down. I only average up in price in bull markets and average down in price in bear markets. So that is how I started. My dad gave me his account to trade when I was 17. I did very well with that, and then at 18 I was off on my own.
JG: So you didn't have a job in the money management industry at all?
I got job offers, but much, much later, after I started my blog. I had one for a short time toward the beginning. It was a unique situation. Sun Yu Park, who was known as Tokyo Joe, ran a chatroom and I used to give him some stock picks, stocks that were moving with real earnings and sales growth. But that didn't last long, and I just went out on my own. I got offers, one from a guy in Chicago, but I decided my heart was in warm weather, so I picked living in Maui over New York City or Chicago.
JG: Tell us about what kind of methodology you use, without getting too proprietary.
I am basically a CANSLIM investor. I like to only go long stocks in bull markets, and go short stocks in bear markets. And with markets that go nowhere, like what we had from January until recently, I do not do anything. I prefer to hold cash. I use a form of CANSLIM mixed in with a bit of momentum investing.
JG: Since you are a CANSLIM investor, do you scan your stocks based on whether they meet a specific criterion?
I have created my own scans in Worden's TeleChart, which looks for short and long trades. For shorts it looks for stocks below the 50-day moving average and below the 200-day moving average, just breaking down on heavy volume. I also do this for high-priced stocks. But for longs I have the software set up to look for stocks above the 50-day moving average above the 200-day moving average. Balance Of Power (BOP), which is a proprietary indicator in TC2007, has to be green. In the best bull markets, a ton of these max green BOP charts show up everywhere. These stocks show up on my scans. Some nights I get 20 and some nights I get 100, but one night I got 295! If they are worth buying, I give all of the members of my website a heads-up by informing them I am going to go long the stock.
I perform best in early bull markets like in 1999, 2003-04. I try to get investors to use full margin and if you study the past big winners on my website or if you are a subscriber, you can see how steady they are. Nothing is that complicated except for making sure you cut your losses if they fail.
...Continued in the November 2008 issue of Technical Analysis
of STOCKS & COMMODITIES
Excerpted from an article originally published in the November 2008
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reserved. © Copyright 2008, Technical Analysis, Inc.
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