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So far, during the very short life of this test, events seem to be supporting that it might be prudent to add a just a little thought and management into playing dead cat bounces. It would be nice to find an "absolute no brainer" way to make money in the market, but, in my opinion, with just a little thought, perhaps one could take a quick look at such things as the cause of the fall (was the magnitude of the fall reasonable?), and what industry the company is in compared other potential DCB candidates, and thereby do better. The requirement that these stocks be bought and sold on the close only also appears to put one at a disadvantage. These factors appear quite clear to me so far with IDXX vs MCSY yesterday (MCSY appeared to me to be the better bet for a decent bounce). Friday's buy: RMCI, didn't bottom (if it really did) until yesterday, meaning, unfortunately, that by the rules of this test it was sold at a loss. On the other hand, the hard and fast rule that RMCI be sold ensures that one doesn't end up an "investor" in RMCI, freeing up the cash for the next buy opportunity. That little rule alone may make this a workable method, though, because it ensures one doesn't "overmanage" the picks and get stuck. It keeps not only the head, but the heart out of the equation. Eventually, assuming there is any money left in the account, a major winner should come along to offset losses. The question is, will that happen often enough when the picks are this arbitrary? Ten or eleven days of trades that work out like RMCI, and the test is over. I am watching this test with great interest. While you could probably find historical data on this theory, there's nothing like running the experiment in real time to really understand the results. |
