Mvic...thanks for your intelligent commentary. The reason why I don't let my winners run is that I believe that my model selects new companies that are actually moving up faster than the company I just sold. As a result, this allows me to compound my profits to faster returns. You'll notice that many of my winners nail 15% in only a few weeks. If I can put a few of these together, the gains can be significant. By letting my winner run, there's a good chance that I'm actually cheating myself relative to other opportunities. Covered calls has been mentioned before. I think it's also a great idea. I just don't do it. Some people like to eat sushi, I don't. I do sell losers, I just haven't sold any in over 2 years. The 8 stocks I'm holding now that are "in the red" all have very reasonable valuations when one looks at their earnings and revenue growth, business model and macroeconomic potential. It's like holding a rare coin, a painting, or a zero coupon bond. I'm willing to live with the dearth of cash flow because I know that its true value will eventually be realized by the market. I never buy on margin, for just the reason you state. My model actually has fared pretty well through bear market cycles. The reason is that no matter what happens in the overall market...even in really bad markets, there are hundreds of stocks setting new highs every day. The stock market is, in reality, a market of stocks. My model identifies stocks that do well, in any market. I don't try to time the market. I just want to beat it, continuously. My style isn't for everyone. Most people on this forum really despise me. Many of them really want me to fail. That's too bad, because I really like most of the people on here and I feel like I can learn from them. I want all the ET members to do really well in the market. I think, in the end, it makes them happier and more civil to others. There's really plenty of room for all of us on here to make money. It is not a zero sum game. I sincerely wish you, and all the other ET members, the best of fortune.
You're going to hurt your arm patting yourself on the back. Many want you to fail? What do you call a 44 year old who has a free website and runs around on ET saying how great he is? Wake up and smell the hair, you're already a failure. Geez, mostly everyone who went to Wharton and is 44 years old has done a load more than what you think you've accomplished.
Take a look at how you define "success" and "accomplishment". I think that anyone who pines for someone else's "success" and "accomplishment" is, in my mind, a failure. I think a man with a loving family IS a success AND has attained the ultimate in accomplishments. Now please tell me what else is there that is actually missing? People need to laugh more. Life is a joke, most people don't get it.
and thinking about it if you are in a company for only weeks at a time covered calls could backfire. For the covered call strategy to work you would have to hold through expiration but you may have reached your target before then. What I still don't get though is why, given your "opportunity cost" reason for not letting winners run, you wouldn't just cut your losses on trades that aren't working out (a central part of most traders philosophy, get out of trade when it isn't working) and put that capital to work in one of your hot new picks. If they are hot enough not to let winners run, then surely they are hot enough to put the money on a losing trade to work in. This board would be so much more useful if people focused on trading strategies rather than individual personalities. Personally I have not seen any correlation between being a great trader and a great human being which is why all these pissing contests and ego boosting and bashing based on one's trading are really a joke. But this is not the humor forum (though some days it seems like it is little more than that).
Mvic just covered what I was writing, while I was writing it so I'll keep it short. If one is pulling out if a rising stock at 15% winnings because there are better opportunities elsewhere, why in the world would on stay in a stock that is falling and has been in the red for what...weeks, months?? Those two strategies conflict in my world. JB
Yea, right... tell that to the guy living under the bridge or a homeless person sleeping in the cold. I'm sure they'll get a good laugh. You don't have to look far to find hurting people living the hard cold facts of life, and it certainly is not funny. Only people like you that are so consumed with themselves fail to see it. Just keep skipping along mrmarket--la la la la; the only joke I see is you.
Because the rising stock is a momentum play....the stagnant stock is a value play. Kind of like when a star burns out and becomes a black hole...it can still be very powerful, but no one can quite see it yet.
That's why I spend a lot of my free time volunteering at the Food Bank and coaching youth sports for underpriviledged children. Just because these people are poor does not mean they cannot be happy. Oh but I guess I do this for my own ego because I'm so consumed with myself. Thanks for your analysis. I never knew why I was doing these things until you just told me.
Outstanding. I know you have better opportunities. But you maybe won't mind if I ask how about work for me.