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Nice post and it sounds like you listen well. Parents appreciate that quality! What you characterize is an excellent position trading strategy which we use but also add in other factors such as the potential for fundamentals to improve within a reasonable timeline, sector visibility (for instance telcom, wireless, E@commerce, etc.), potential for surprise buyside catalysts, reduced potential for any more bad news, etc. Even with all the stars aligned this strategy is very risky and it requires baskets of stocks so those mistakes we all make are offset with enough winners. Middle of October is an open season for this kind of investing with mutual funds closing their books, and year end with a restructuring of individual investor portfolios. This year we will add one other benchmark and that is to talk directly to each company the first week of the year to let them tell us that their products are free from Y2K bugs. If they have problems (software hits, microcode problems, imbedded chip data integrity errors, etc.) then that is a red flag since it will draw them into litigation or, at the very least, cost them time and money to fix the problem which redirects focus. Just some comments on a variation of your approach. |
