Quote Originally Posted by slgerritz View Post
Thanks Mike.

I really appreciate your efforts to help us become better investors.

I live in Oregon, but just bought a vacation place in Cathedral City. Maybe I could drive over to attend a monthly meeting some time.

I have one more question. Do you use a particular method for protecting positions, such as using a certain stop or another rule based method?

Stephen
Stephen,

I do not use stop orders. All selling of positions are based on sell rules. The sell rules can be seen is some of the presentation material that I have made as sticky notes at the top of the Forum. I don't recal which presentation starts the discussion of sell rules, probably around the third one. The primary sell rules look like this:

!. Sell all positions that drop 7 to 8% below your purchase cost.
2. Sell positions that exhibit the largest down volume since the beginning of its advance (initial first-stage breakout)
3. Sell positions that break above a long-term upper trend line. An upper trend line should be drawn on a weekly chart with log price scale. A properly drawn trend line should touch at three or more places spaced months apart.
4. Sell stocks that are exhibiting a climax run. A climax run needs to be at least 18-weeks from a first or second stage base breakout or 9 weeks beyond a later stage base breakout.
5. Sell positions that can not hold the 50-day moving average line, give positions that stay within a few percent of the 50-day line 5 or more weeks to recover the 50-day line before selling.
6. Normally take profits once the position is up 20-25% above a proper base breakout buypoint. If the stock is up 20% or more in three weeks or less, hold this position until at least the 8th full week after the breakout. At that point a decision can be made to hold the position longer or sell. This rule is intended to get you beyond a normal pullback that occurs in powerful stocks.
etc...