The "Stock Trading Riches" Investment System

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Praveen,

You refer to your system as contrarian, inasmuch as you are buying stocks when the prices fall, and selling shares when the prices rise. However, your method of investing excess cash today, is not contrarian, but following the herd. In other words, you have excess cash, because you sold a lot of shares. This doesn't sound like a market bottom to me, and it certainly isn't contrarian. If cash was exceeding your threshhold, because the portfolio shares had fallen in prices a great deal, that would be contrarian. I suppose if you were using the cash to buy depressed stocks and sectors, that would be a different story. However, the two stocks I'm familiar with, CE and DEO, have both had great rallies. If they were already in your portfolio, you'd be selling today, not buying. It would seem a better strategy, to hold the cash until your portfolio was signalling a number of buys.