I will share with everyone my trading strategy. I typically holds stocks from a couple of months to a year or so. The time horizon is not set in stone, but for me thats generally when my investment hits my price target.
I believe everyone when entering a position should with a price target range. Which means you have the highest price you think the stock could go and the minimum profit you think the stock will make and you will take if the postion is successful. The reason why this price range targets are important is you need to compare this investment to other investments to see what is the better investment in your opinion, since we don't have enough money to invest in every stock in the world. How I pick a price target range is kind of conservative. 1) PE at high range you try to match to the industry average, where as generally the low range I generally like to give a PE of 10-15, but the company only realize that if it is growing profits and revenues, although I do invest in some cost cutting stories that turn profitable, they are not my favorite investments. Now I must make clear we are not married to these price target ranges, and their are other things that go into them that are kind of subjective (my gut feeling). The reason why we are not married is sometimes we make a mistake and the stock simply will never live up to expectation, consequently earnings could go through the roof and stock could then be worth twice what you high end price range is so we don't want to corner ourselves into a price range to sell a stock, but rather just use it as a guide to help us determine what investments are better for us to make.
I generally invest in the value microcap arena, and am a rather frequent poster on the value microcaps board. I tend to believe that value microcaps are the way to go, and have been pretty successful with them. I tend to invest in small companies with pe less then 10 that are growing earnings and revenues. I generally hold between 10-20 stocks in my portfolio at anytime. And currently that goes up and down, when I find opportunites in the market, or stocks have become fully valued in my opinion then I sell them. I'm not using the buy & hold strategy, and I'm not day trading either I'm rather just waiting for the valuation of a stock to be reached, once it does that I'm gone.
Currently I hold a cash position of about 53% that tells you a little bit of how I currently feel about the market. From the fallin dollar, to rising oil prices, to the rising deficit, to the threat of inflation spiking, and the FED raising rates higher then anyone may expect. These things are what the market is dealing with, and it doesn't mean all of these bad things will continue to play out or get worse, but they are all a risk to the market, so therefore a risk to the individual stocks one holds. Generally though I keep around a 20-25% cash position when I'm feeling good about the market, and about 10-15% when I'm really bullish. And although those market moving events are part of the reason why I'm in so much cash, the other part of the reason is it is getting a little harder to find value microcaps that meet my criteria then is was 2 years ago to find them. However, that doesn't mean they can't be found because their are enough opportunities out there in my opinion. I must admit I do buy a lot of the OTC securites, but do not buy pinks, because they are much more risky in my opinion.To give you an idea of the types of stocks I mean by this CGNW.ob is a value microcap, but that fits under the cost cutting mold, more then the revenues, and business growing. The reason why we like this is if the second half of their fiscal year duplicates the first half the stock is basically at 3.6 times earnings, which is too low and should be trading at 7 or 8 times in my opinion and if we get some growth (we are getting a little, but need more then we might get a multiple of 10-12). Where companies such at PDGE.ob and IMPL.ob are more about growing revenues and earning through growth of their businesses obviously their trading at higher pe about 10.5 and 8 respectively from a trailing perspective.These stocks, because of the growth they are experiancing deserve more of a 10-15 pe. So these stock give you a little idea of what my strategy is in terms of actual stocks. The last thing I want to tell everyone is you need do a lot of DD in the value microcaps arena or any stock type for that matter, you just can't buy something because someone says so, even if they have a great track record. If you do this you will most likely get burned, and although a lot of people like to blame others they should be truely blaming themselves if this occurs.
This gives you the structure of my strategy as well as some current feelings on the market, yet should be considered pretty broadly, because if I really explained myself I'd be writing a book. LOL. Keep in mind all of this is just my humble opinion.
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