My apologies but timing was real bad. We took the kids on vacation on 3/8 and returned on 3/12. I just got caught up with everything else and was just now able to log into SI.
LLT - Lower Limit Triggers.
Everyone likes to create their own acronyms. The LLT is my acronym for a method of protecting profits. Too many times we see a stock run up and then start to slide. The inclination is that it will reverse back to the positive and regain the prior price levels. Sometimes they slip lower and soon we finding ourselves in a losing position. Or the stock will continue to slide and then pop back up. If we looking at the first price and then the last declining price prior to the upswing, you see that a trading range might have existed that we could have profited by if we had a strategy.
So, we only buy stocks we are extremely confident in and are convinced will present profits. When profits are presented, we either take the profits or protect them. The LLT protects profits and protects ourselves from our worst enemy, our greed and reluctance to take profits.
While there are numerous nuances, we will give a broad example of the LLT strategy.
1. We only invest in stocks that we believe have greater than a 20% upside potential.
2. We also believe in letting profits run after the reach the targeted goal.
3. We do not believe in letting profits erode.
4. So, if we have a $20 stock and it goes to $24, we made our 20%. we let it run a bit more and if it gets as high as $26, we put a $24 LLT in place. we will exit the stock at $24 with no regrets, should it start to reverse course. As long as it performs, we will raise the LLT. So, if the stock makes it to $28, we might have a $26 LLT.
5. We hardly ever, if ever, lower an LLT. Eventually the LLT will create an exit and profits are taken.
Suppose the stock makes the advance from $20 to $24. We might not want to have an LLT at that time or we might not want to have a LLT of $24 since it would be close to triggering. We might put a $23 LLT in place to guarantee we walk away with a 15% profit. So as long as the stock remains above $23, we have no problem.
The market is cyclical by nature and we must expect that LLTs will be triggered at some point in time. This does not worry us since we have a stable of stocks to roll the proceeds into that we expect to perform just as well. so, even if the stock trips an LLT and then goes to the mooon soon after, we usually have the funds in another opportunity that is expected to perform.
as the profit percentage goes up, we are more than likely willing to give the LLT more flexibility. At 20% profit, we might start to view LLTs increments of 5%, but as the profits run up and are in the 100% range, we might not be as strict with the LLTs and allow a 10% window for the LLT.
The beauty of this discipline is that over the past 4-6 sessions, we had a large number of LLTs create exits, which we followed. Now, with all of the declines this week, we are looking at getting back into some of these stocks at 20%-25% discounts. This means we can now diversify into more stocks or we can enter the same stocks with a larger position.
This is just part of the strategies and disciplines that are making stellar profits for the readers of RadarView, who should have built up a good deal of cash reserves and considerable profits over the past few months.
For more information or other questions, feel free to contact me at avance@radarview.com
Andrew Vance |
