I can be Huge too

[antioch6]

A little more detail on these strategies? It's nothing too complicated. One part of my portfolio is dedicated to finding cheap companies and buying them when they're out of favor. this reduces the downside in a bear market because these stocks have already gone through most of their selling, so any further market related selling would be limited compared to most stocks. The simplest way I protect my capital in a bear market is keeping plenty of cash with the sole purpose to buy stocks during a market crash. Since I'm only 23, I can afford to wait patiently with 50-75% cash for another great opportunity to buy stocks at a real discount. According to value investing, this should happen around the time the s&p trades at 6-7 P/E ratio, and according to market history that should end the long term bear market started in 2000.

[Deaddog]

A little more detail on these strategies? It's nothing too complicated. One part of my portfolio is dedicated to finding cheap companies and buying them when they're out of favor. this reduces the downside in a bear market because these stocks have already gone through most of their selling, so any further market related selling would be limited compared to most stocks. The simplest way I protect my capital in a bear market is keeping plenty of cash with the sole purpose to buy stocks during a market crash. Since I'm only 23, I can afford to wait patiently with 50-75% cash for another great opportunity to buy stocks at a real discount. According to value investing, this should happen around the time the s&p trades at 6-7 P/E ratio, and according to market history that should end the long term bear market started in 2000.

I got a few years on you; I’m in the distribution stage of my investing career and that’s why I’m looking to preserve capital.

Your strategy is an excellent strategy!! Value investing is what Buffet does.

However that’s not what you are doing with your 2 recent picks.
S&P P/E is about 16 (that’s what yahoo says for SPY) and the 2 stocks are near their 52-week highs after a bull run that is over 4 years old.

Your thinking is right that you should wait for the inevitable downturn then get fully invested.

Having spent some of my misspent youth on a farm I know enough not to chase a tired Bull, he’ll eventually turn on you and you could be in for a world of hurt if you don’t have somewhere safe to hide.

Do you have an exit strategy for the two stocks you just bought?

[antioch6]

I bought LMT and KRE through my Mr. Market type strategy. If the overall market stays afloat these should outperform. Together they make up 5% of my money. Not too much since I'm expecting the market to pullback the next few weeks. My long term stocks thread is my value investing/large upside strategy thread. This one is for a quantitative mechanical strategy that finds outperforming stocks. The market does look high with a P/E around 18-24. I'm trying to get 20-25% invested with this strategy because eking out a few percent a year is better than losing a few percent in cash or bonds to inflation. When the market does finally crash, even if all my stocks go down 80-90% and I'm 25% invested, I still have 78% of my original money to start buying stocks dirt cheap with huge upside. I'm posting every single trade I do and why I do it. Maybe now I'll include how big my positions are. It would be different if I had 50% of my money in LMT and KRE instead of 5%.

[Deaddog]

So you don't have an exit strategy. Just a little advice from an old fart who's been thru bear and bull markets; you should have a plan on how you will handle the stock going up or down. You can't control the markets but you can control how you react to what the market does.

As for posting your positions I encourage you to do that. Not in dollar amounts, but as a percentage of your capital. I tried to get Mr Market to do that but he was very reluctant to reveal how he managed his accounts.

When I posted my trades I posted the amount I had at risk as a percentage of my capital. This amount wasn't the percentage of capital I had invested but the % of capital I was willing to lose before I sold and realized my loss. I also posted realized gain or loss as a percentage of capital.

Good luck with your journal.

[tiedyed1]

I tried to get Mr Market to do that but he was very reluctant to reveal how he managed his accounts.

I have been enjoying this stimulating ride, along with sharing the finest meats and cheeses, dating back to the IBD bulletin board days; and while not looking to speak out of place here, did want to stress my opinion concerning this statement.

As clearly stated, the Mr. Market picks should not be misconstrued as representing individual buy or sell recommendations and should not be viewed as such.

He shares his system, clearly defined, for a very focused goal and thoroughly enjoys the track record of his results.
None of this reflects factors such as diversification, management of individual portfolio or overall accounts, etc, etc.

Personally speaking, I read the opinions of Mr. Market and other excellent members on here and will take that reading, conduct my own due diligence, and then, when I feel appropriate, choose to adjust my investment portfolio
accordingly.

-Adam
tiedyed1

[Deaddog]

He shares his system, clearly defined, for a very focused goal and thoroughly enjoys the track record of his results.
None of this reflects factors such as diversification, management of individual portfolio or overall accounts, etc, etc.

tiedyed1

That was my point to Mr Market. A whole bunch of winner in a row is meaningless if you don’t have things like position size or return on capital factored in.

I really enjoy Mr. Market, his picks, especially the fact that he shares his methodology so freely, and his outstanding write-ups. However I also like to challenge conventional wisdom and love a good debate. The difference of opinion is what makes a market.

To my way of thinking it’s all about making money. After all it takes cold hard cash to buy fine meats and cheese. I can’t control the market; I only have control over how I react to what the market does.

I’m not knocking Mr. Market or his method. I love his picks. I’m just offering the opinion that there is a potential to make more money with a little risk control. The Big Fellow and I have had this discussion and have agreed that our particular strategies suit our particular needs and that each of us should do what works for us.

One thing I respect about Mr. Market is that he has a plan and sticks to it. I encourage all investors/traders to do the same thing. Once you have opened a position, know where you will exit. It takes the emotion and stress out of managing your portfolio.

[antioch6]

We might get an idea how a Mr. Market portfolio can be managed from this thread. My strategy is similar to his, only I don't have an exact upside target to sell. I view this as a cash producing system that works while the market goes higher or sideways. It's just a piece of the whole in my investment strategy. Since the market is probably high as we both agree, I'm limiting my positions to 15%. If we were near the end of a long bear market and valuations were low, I might up my positions to as high as 50% with this strategy. In that way I am trying to time the market, but this is still an always invested strategy with no hard stop losses.

[Deaddog]

. My strategy is similar to his, only I don't have an exact upside target to sell.

What will trigger a sale? Letting your winners run is a great idea but you should have a plan to exit.

I view this as a cash producing system that works while the market goes higher or sideways.

Are you looking at dividends to produce cash or capital gains?

but this is still an always invested strategy with no hard stop losses.

I sense a reluctance to sell a stock once you have taken a position. You are not alone with that feeling; it’s the hardest part of investing. It seems you always sell at the wrong time. Early in my investing career I was sure that “They” were waiting for me to make a decision. If I held the stock “They would let it go down. But as soon as I sold, “They” would start buying and take the stock to new heights.

Keep in mind that the decision to hold a stock is the same as the decision to buy a stock. If you wouldn’t buy a stock today, why would you hold on to it?

[antioch6]

Stock Picks so far this year with results.


The best stock has been my RAD pick that came from introducing my brother to stocks. He works in the pharmacy/assisted living industry and his insight helped us identify RAD as turnaround, and now was the time to buy. LMT and KRE came from my quantitative screen. They have performed okay, about the same as the market. INTX came from screening for dividend stocks that aren't overvalued by simple metrics.

I haven't invested more because of fear the market could go down. DAL was also on my high priority buy list, but I didn't have enough conviction in the value and especially the market to make a purchase. My best ideas for stocks have always come from finding a new product (Apple ipod) or a service (Chipotle, Netflix) that I love. The best time to buy the stock has been immediately after I encounter the company, and a good time to sell has been after a year at least. Great ideas can also come from new or changing fundamentals, communicated to me by insider friends. The best time to put money into these ideas is also immediately. My quantitative screen will produce superior outperforming stock picks, but they will be closer in correlation with the S&P 500.

I conclude that 2 more position sizing rules should be added to my stock rules:

1. Stocks from my quantitative screen should each be 1-3% of my stock money
2. Stocks from companies I understand and like should be 3-9% of my stock money

After actively watching it for the past 4 years, I have no idea where the stok market is going. Ben Graham gives good advice: we should always have at least 25% in stocks, and at least 25% in bonds.

[billyjoe]

antioch, Here are some selling signals that can be used: 1. stock price drops below 40dma. 2. trend line from higher lows breaks below previous low. 3. a trusted source says market signal goes to a "sell" 4. stock has reached your pre-determined sell number 5. 50% of your profit on an individual stock is gone. 6. you need $$ to buy the next AAPL so you are forced to sell your Enron.

----------------------billy