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Technology Stocks : Compaq
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To: Christopher who wrote (65710)7/25/1999 9:03:00 PM
From: Christopher  Read Replies (2) of 97611
 
General advice for investors.

The DOW and NASDAQ are not the only ones that go through BULL and BEAR markets. All stocks do as well. There is something called a Business Cycles which usually last about 4 years to 5 years or sometime longer. Through that Cycle the stock will go through a BULL market and a BEAR market. BULL markets usually last two to three years and BEAR markets about two years. Stocks fall a lot faster then they go up. The trick is not to HOLD a stock during its BEAR market. People that got burned with CPQ is because they held it through its BEAR market. Bill O'Neill the founder of Investor Business Daily recommends to sell a stock that loses 7% or 8% because this would not be a correction.
Let me give an example. You buy a stock at $100. It goes down to 93 and you sell since this does not qualify for a correction and in all likelihood it is more.

Don't average down but average up. What does that means? If you want to buy 1000 shares of IBM then buy initially 500 shares. Why? If IBM goes down 7% then you sell and you would have cut down your losses by a half!? If IBM stock goes up 10% then buy another 500 shares. If IBM goes down now 7% and you sell your losses would be kept to a minimum.

Good trading,

Christopher
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