Hi Guy,
I've always enjoyed taking profits off the table too, but hate to be left behind if a stock really takes off. VTSS was at 4 5/8 not that long ago and now it's in the $50s. It's offered very few really good re-entry points ($18, then $30) and there's been pretty big $$$ left on the table along the way.
I use a method called AIM to manage my long term committments to stocks like VTSS. This allows me to participate in their success for years and still limit risk along the way. I sell off small amounts of the stock as it rises and, in a manner similar to your 'channel trading', add shares back to the overall position on large dips. If the price rises to $200/share, I'll still be invested, but won't own as many shares as I do right now. I just can't stand the idea of being left behind!
Like you, I look for strong up-trends but also strong fundamentals. Then I plan on holding at least 3 to 5 years. During that period of time AIM then manages the risk of being involved with high growth stocks with high BETA ratings. AIM's been around since 1977, but hasn't been widely used. I have 10 years experience with it and so far so good.
VTSS has made me nice money and now there's a fat cash reserve waiting for the next major dip in the price. If it goes up, I'm still long plenty of shares, and if it drops for a while, I have plenty of cash to add more shares to my position. Win-win. My trade range is to sell 11% of my holding if the price hits $59 7/8 and to add 11% more to my holding if it falls to $26 7/8. I've expanded the trading range on this stock because of its speculative nature.
Hope this helps,
Tom in WI
PS: If you would like to see how AIM has handled VLSI try my web page execpc.com |
