Robert,
Just a gut read after running some simulations on undervalued stocks that go up, as opposed to sideways or down. JBL would qualify as "up" stock, but not really undervalued.
I think you want to use buy safe 0%, Sell safe 20% just after creating initial positions. This allows you to accumulate shares, but not sell the initial large block of shares unless the price moves significantly higher. Clearly if you use this as opposed to the vanilla buy safe 10%, Sell safe 10% you are making a judgement call that the stock is going to go up.
For instance when I run the simulation on GALT, start date 2/11, $80k initial investment, initial cash level 25%, minimum trade 5% of portfolio. For Buy and Hold numbers $60k invested, $20k held as cash to make things equal.
buy safe 0%, Sell safe 20% - $160,503 - 45% cash level, 12 trades
buy safe 10%, Sell safe 10% - $153,170 - 48% cash level, 13 trades
buy safe 20%, Sell safe 0% - $146,084 - 51% cash level, 14 trades
Buy & Hold - $177,325 - 11% cash level 7/9, 0 trades.
From this one example it appears that the lower the Buys safe and higher the sell safe, the closer you are to Mr. B&H.
I like to buy cheap stocks and sell them when they become "fairly valued" or "overvalued" so buy safe 0%, Sell safe 20% would be the way I'd go when I thought the initial position was "cheap".
JBL is in the middle to upper level of my comfort zone and my definitions of "cheap" and I sold 1/2 my position at $49 a while back. Honestly I still haven't figured out the "right combination" for AIM that suits me and I'm still working on it.
Tom's testing of buy safe 20%, Sell safe 0% may work better once you have accumulated shares over a longer period of time and pulled a few Vealies along the way.
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Dave |
