Saturday, October 26, 2002 11:12:19 PM
ZEEV ON PICKING STOCKS TO BUY LONG
The only practical advice I can give you is to screen lists of stocks that have made new highs and buy them on retrenchment with a stop loss a safe distance under the most recent retrenchment's low, then keep raising that stop loss as the stock advances (an example of the stop loss raising tactic was the most recent Dow Gambit, though it did not use the new highs principle for selection). In a market like now, you may lose 1/3 of your trades, with something like 5% to 8% loss, but the other two thirds should yield a good 20% before they fail (fail, due to the bear, in a bull market, you can hold and raise the stop for years).
If you have an existing painful folio, my advice is quite simple, look at all the charts and select all the stocks that have not made a 4 month (high) in the last two months, sell them without hesitation and put the money in those stocks that have made a new four month high in the last two months. The process of pruning out losers and putting the money in winners strengthen your folio (but always use stops, even darlings get their day in hell). Make a rule that you do not average down, unless it is a very short term tactics to lower your original cost (thus sell the "averaging portion on rallies). Averaging down has a tendency of concentrating your assets into weak stocks and is a bad "trading advice" (It is different in a long term folio of indexed funds for retirement where monthly contributions are made independently of where the market is).
MDA Thread #board-1320
Turnips Thread #board-1125
Trading Info #board-1220
Retrace #board-1345
PPT #board-1280
http://www.angelfire.lycos.com/goth/augieboo
The only practical advice I can give you is to screen lists of stocks that have made new highs and buy them on retrenchment with a stop loss a safe distance under the most recent retrenchment's low, then keep raising that stop loss as the stock advances (an example of the stop loss raising tactic was the most recent Dow Gambit, though it did not use the new highs principle for selection). In a market like now, you may lose 1/3 of your trades, with something like 5% to 8% loss, but the other two thirds should yield a good 20% before they fail (fail, due to the bear, in a bull market, you can hold and raise the stop for years).
If you have an existing painful folio, my advice is quite simple, look at all the charts and select all the stocks that have not made a 4 month (high) in the last two months, sell them without hesitation and put the money in those stocks that have made a new four month high in the last two months. The process of pruning out losers and putting the money in winners strengthen your folio (but always use stops, even darlings get their day in hell). Make a rule that you do not average down, unless it is a very short term tactics to lower your original cost (thus sell the "averaging portion on rallies). Averaging down has a tendency of concentrating your assets into weak stocks and is a bad "trading advice" (It is different in a long term folio of indexed funds for retirement where monthly contributions are made independently of where the market is).
MDA Thread #board-1320
Turnips Thread #board-1125
Trading Info #board-1220
Retrace #board-1345
PPT #board-1280
http://www.angelfire.lycos.com/goth/augieboo
Join the InvestorsHub Community
Register for free to join our community of investors and share your ideas. You will also get access to streaming quotes, interactive charts, trades, portfolio, live options flow and more tools.
