What trading style is better...slow and steady..or hitting homeruns once in a while?

Discussion in 'Trading' started by gimp570, May 24, 2007.

best trading style for the long term

  1. slow and steady....

    65 vote(s)
    75.6%
  2. Looking for the big trade.

    21 vote(s)
    24.4%
  1. toma, I'm envious of some of your skills to be quite honest. I prefer what I do in the long run, but I'd love to possess the skill of the scalp.

    For stock screening small caps you have to do it entirely different of large caps and even many medium caps. Good ways to check out small caps are to look at(judge) things like:

    - management (most important thing in my opinion)

    - business plan and length of time the business has existed(some of these startups can take years to work, this is also dependent on efficiency of management)

    - stock structure(too many small caps with too many shares bleed like pigs. management of these small caps love to dilute as well. small oustanding share counts, limited dilution history, etc. are very very very important.)

    - stock price(if you're looking for developmental companies that can grow, you'd probably either look for companies that have lingered at a certain price or have started moving north. I'd even look at companies that have gone up significantly. Some of the stocks I've done the best with already moved up a lot, they still doubled or tripled after I bought them.

    - Coverage - I think a company being at "trade" shows and exhibiting what they have to exhibit is important and if you factor this in with stock dilution you can see if the company is promoting a piece of shit so they can dilute or if they're actively trying to promote their company.

    Smalls caps are an intuitive business I think...management is usually more personable and if they're not, well that's not a good sign. Small cap buying is more interesting if you're a people/story person than a fundamental person who isn't a good judge of people/things/etc. If you are good at studying historical price appreciations and business growth rates and can't live without them you'd kind of be lost in the small cap sector.

    Getting back to what I guess may have been your original wonder about where I find them...word of mouth, message boards(I know, but for small caps it's one of the last bastions of good finds), newsletters sometimes aren't bad, etc. I find it best to read a company profile, leaf through the financials, the company's SEC filings, stock price, etc. If you read the profile of the company or see anything in management or the company's filings that you don't like, STAY AWAY. Anyone of those being a bit outside of what makes a business work can crush a company.

    You might have a great idea, great business plan, great management, but if they've never been in control of something like issuing stock or financing and they decide to dilute like madmen to finance acquisitions you'll never see the bottom of the stock price. Not to say financing is bad, but it's definitely not something you should cheer for more than once. :D
     
    #31     May 27, 2007