8-19-2016 comment

[Mike]

Thank you Pascal,

I misunderstood. Here are the results:

Sell using the six sell rules: Profit = $30,867.38 (unrealized profit minus realized sell (gain/loss).

Keep all positions and not sell at all: Profit = $26,239.55

Both representations assume buying a $10,000 position in all cases.

I think one possible conclusion is buying stocks with substantial earnings, accelerating earnings, emerging from sound bases, that have visible institutional activity leads to stocks going up in the medium term. This kind of analysis ignores draw downs. STMP, for instance, would have been down 40% at one point and is now down 23%. The amount of capital employed is different in the two approaches. Hanging on to losing positions does not free up money to buy new positions. The portfolio was never negative using the sell rules. And ten positions are held vs. 41.

Successful investing requires conviction; this requires being comfortable with the system you are using. Medium to long-term investing is what 'fits my eye". I recognize a shorter term system, turning over the portfolio more rapidly also works. Selling positions that are not working also helps me sleep at night. Modifying my rules to demand visible breakout volume and using a simple set of end-of-day (week) sell rules has also drastically reduced the number of trades I am making. I can watch the open and determine that there will be no trading today because extrapolated end of day volume on my watch list stocks shows that they are all running light volume.

There has been an unintended health consequence of my current approach: I signed up for local Yoga classes offered during the slow part of the investing day.

[Pascal]

Thank you Pascal,

I misunderstood. Here are the results:

Sell using the six sell rules: Profit = $30,867.38 (unrealized profit minus realized sell (gain/loss).

Keep all positions and not sell at all: Profit = $26,239.55

Both representations assume buying a $10,000 position in all cases.

I think one possible conclusion is buying stocks with substantial earnings, accelerating earnings, emerging from sound bases, that have visible institutional activity leads to stocks going up in the medium term. This kind of analysis ignores draw downs. STMP, for instance, would have been down 40% at one point and is now down 23%. The amount of capital employed is different in the two approaches. Hanging on to losing positions does not free up money to buy new positions. The portfolio was never negative using the sell rules. And ten positions are held vs. 41.

Successful investing requires conviction; this requires being comfortable with the system you are using. Medium to long-term investing is what 'fits my eye". I recognize a shorter term system, turning over the portfolio more rapidly also works. Selling positions that are not working also helps me sleep at night. Modifying my rules to demand visible breakout volume and using a simple set of end-of-day (week) sell rules has also drastically reduced the number of trades I am making. I can watch the open and determine that there will be no trading today because extrapolated end of day volume on my watch list stocks shows that they are all running light volume.

There has been an unintended health consequence of my current approach: I signed up for local Yoga classes offered during the slow part of the investing day.

Thanks Mike!

I think that we should all practice Yoga these days!


Pascal