Almost no one who invests exits on stops as part of a trading strategy. People exit when price peaks. You exit on a target for some reason. Why do you search for the end of the trends (last 15%) in your culling process? Why do trend ends appeal so much to you? Could you post a graph of several items on a chart? Say these few: Initial capital and added capital. Profits on invested capital. Total capital. The upside down stuff will show up as a by product. You started with some capital and stocks. Some did not complete a cycle before you started a new portfolio of 15 streams after cancelling the former one which was in decline. One of your moderators posted the process. It is now closed here at ET. At a point the 12 to 14 stocks in your streams that grew from 2 at the begriming had to wait a year or so to get through a decline and begin another cycle. What it looked like was that you traded two streams of capital while the others you added over two years languished. It looked like before you started over again that the long term results of your trading (investing) was that the languishing streams (10 to 13) were losing more money that the 15% cycling streams profited. The graph I suggested shows that. Your brother's account, run under POA by you makes about 72% per year. (60% in ten months of twelve). How long has it been running. Your original accounting made money, then slowed down, then reversed, then was started over again at 15 streams. I plotted your bros account on a chart I use. (See Temp (MM's Bro). The other data on the sheet is related to a PnL. The fan of possibilities shows that the account of four steams takes 1 1/2 quarters to double. Beginners are running it. If you do not want to respond, I understand from the reasons you gave me in the past (Too busy with family, mostly).
Bullcrap When you first started you posting, you would claim a guaranteed return of 15% or better, when you real return was only about 3%. Apparently your guaranteed return completely omitted losing positions. Now you claim otherwise. I just dont believe you nor do I care to research after you have been proven to be a joke. What I do know is that your strategy is not some amazing intellectual secret but a known method by anyone who has ever read IBD. Anyone who is familiar with the market knows that it only works in uptrends. But you, since you have a wharton MBA, think that it's a genius strategy since you are so damn educated. I don't have anything against educated people, just against pompous idiots who think degrees imply true intelligence. I have no questions about your strategy, since I can just look up an old copy of IBD if I was ever crazy enough to be interested in it. And it's not trading that you do, it's wanna-be investing. Just stop posting crap and if you have any true interest about real trading and real investing, start asking questions instead of constantly bragging.
"I suspect he controls his risk by the proper selection of stocks." The 'proper' selection of stocks is not a comprehesive risk control strategy. I'm not asking how he gets into a stock. I could care less, everyone has their own means of deterning an entry. I'm asking how he gets out. I'm suggesting he clarify what gets him out of a losing position. Now the definition of a losing position is very straight forward. It's basic arithmetic based on price action. It follows logincally that ones exit strategy should also be based on price action. You don't get any profits or losses from fundamentals. You get profits or losses from buying and selling. What causes Mr. Market do sell a loser. Supposing a company that Mr. Market has "properly selected" starts tanking for a reason he cant understand. Where does Mr. Market call it quits...that is the question here.
I will only add that there are three ways that I'm aware of to control risk. 1) use a stop loss 2) implement a hedge 3) Diversify heavily. Mr. Market....I hope you are hip to one of these.
Actually, many people consider it to be. But, as you say, the question of when to sell is an interesting one. Even the most ardent B&Hers would be unlikely to say "never".
Actually, one needs to be truly exceptional to be accepted by Wharton. This is conventional wisdom and an accepted fact by society.
I sell a stock when its fundamentals indicate it is no longer valuable to hold. Of the last 51 stocks I have purchased, 41 were sold for a minimum 15% profit. I'm presently sitting on 7 that are worth less than I paid for them. I think all 7 of these are great values (based on the analytical skills I acquired in graduate school), so I see no reason to sell them. Hope this helps.
Excellent points...by holding up 14 stocks in my portfolio, I basically eliminate a good bit of non-systematic risk. Under the CAPM model, non-systematic risk is eliminated as the number of assets grows. Only systematic risk is priced by the market and investors are compensated in expected return for bearing systematic risk. The APT and CAPM, which won their founders Nobel Prize in Economics, have long been widely investigated and applied in financial research and practice. However, it was until recently that the rationality of diversification of non-systematic risk was proved and a reduced-form evolutionary equation for portfolios of lognormal assets was derived on a rigorous mathematical basis by N. Hofmann and E. Platen (Mathematical Finance 2000) for the first time in the literature. Actually I studied under Prof. Donad Keim and we ran empirical models that contributed to this hypothesis.