A Bit More Bull

Bear Mountain Bull Annex/Archives

Buy the Leaders October 27, 2006

Filed under: Trading Wisdom — BMB @ 8:44 am

Deron Wagner has some good advice on picking stocks this morning – even though his column concentrates on trading ETFs. When looking for stocks to buy within your sector of choice, he says you should:

Buy the leaders, not the laggards! When I was a novice sector trader years ago, I often made the expensive mistake of buying the stocks that were lagging behind others in the sector. My thought process was that the leaders had already gained too much, so the laggards were bound to “catch up” to the leaders. While this is a logical theory, I learned the hard way that it rarely works that way. Time and time again, I watched my laggard stocks go nowhere, while the stocks that were “already up too much” continued to surge higher. Simply put, stocks or ETFs showing relative weakness within a sector do so for a good reason — traders and investors are not buying them. The reason they are weak does not matter! All that matters is the price action (and volume). Stocks and ETFs with relative strength are not only the first ones to shoot to new highs when the corresponding sector index bounces just a little, but they are also the last ones to fall if the broad market suddenly reverses to the downside.

 

The Ten Commandments October 18, 2006

Filed under: Trading Wisdom — BMB @ 8:16 am

“The Ten Trading Commandments”, according to Todd Harrison at Minyanville.

Here’s a sampler:

Discipline trumps conviction.

No matter how strongly you feel on a given position, you must defer to the principles of discipline when trading. Always try to define your risk and, above all, never believe that you’re smarter than the market.

Opportunities are made up easier than losses.

It’s not necessary to play every move, it’s only necessary to have a high winning percentage on the trades you choose to make. Sometimes the ability not to trade is as important as trading ability.

Emotion is the enemy when trading.

Emotional decisions always have a way of coming back to haunt you. If you’re personally attached to a position, your decision making process will be flawed. It’s that simple.

Zig when others Zag.

Sell hope, buy despair and take the other side of emotional disconnects in the context of controlled risk. If you can’t find the sheep in the herd, chances are that you’re it.

 

Where's the Risk? October 3, 2006

Filed under: Trading Wisdom — BMB @ 5:21 pm

Heard on Gary Kaltbaum’s radio show today:

“The most risk is always going to be in the areas that had the biggest moves up already, and everybody’s talking about ‘em, and then you get sucked in at the most inopportune time — and then you don’t know what hit you. That’s your commodities (recently), that’s your technology and internet in 1999. And I promise you, there will be plenty more.

Your job is to make sure it never happens to you — if you miss something, it’s OK!   What’s not OK is you jumping on top of the pile, after the run, and burying yourself.”

 

Is This Love? October 1, 2006

Filed under: Trading Wisdom — BMB @ 12:54 pm

From Ron Sen today:

Investing isn’t love. Stocks don’t love you back. They don’t even know you own them. Falling in love with a stock may not hurt you; it may kill you. That’s why you have stops or other forms of risk control – such as diversification, asset allocation, options, and hedging.

It’s not about love? Someone needs to tell the whackos on the message boards.

 

 
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