Dennis,
Buy low, and sell high.
This is not very technical really. This is the opposite of what everyone is doing now. You look for stocks that are out of favor but financially sound, and try to find the bottom (IE, buy low). Then, when everyone else wants the stock, and bids up the price, you are selling them your shares (IE sell high). Sounds easy, right? There are downsides to this system. If you look for a bottom in a stock, you may get stuck in it for a long time. If you listen to the CANSLIM people, you are making a mistake doing this. (Buy high, sell higher). The reason for the decline in the stock could be something VERY wrong at the company that you can't always uncover by reading the financial statements. I remember IBM in 1992 & 1993 when I was sure the stock would hold in the $70.00 range due to technical support, but it fell into the low $40.00 range. If you really like the company, and you have the courage, you could average-down, but most likely when you see the stock decline 50% from your purchase price you sell instead.
(I held IBM into the high $90.00's but almost sold for a loss in this example. I really missed the ride after that, however). Treat each stock you buy differently. Not every system works everytime.
Hope this helps,
Steve |
