If it is not too intrusive, I'm curious as to how successful you have been on balance in your investments over the years, and whether you have, in fact, found it possible to use valuation metrics to time the market successfully.
Tekboy, not addressed to me but this is exactly the sort of thing I find myself doing. Whenever I get comfortable owning what I own say CREE, NTAP, GMST, et al some other superstar always crashes or some other opportunity always arises. I have found that trading on the margins and market timing does not work but that JUMPING ON COMPELLING OPPORTUNITIES works wonders.
E.G. RMBS (discussed to death), BRCM at $115 last month (or thereabouts), Q at $56 (now), GMST in the 30s a few weeks back, etc.
My key has been to stick to the best companies, never buy anything I would not want to hold for the long-term, and plan to actually hold for the long-term, but allow the flexibility to adjust as COMPELLING OPPORTUNITY presents itself.
To me a compelling opportunity either consists of either a (1) FUDdded to death superstar stock with no change in fundamentals or (2) a superstar stock that is a victim of market sentiment.
In all cases the superstar stock must be in or foreseeable about to enter hyper-growth, be the dominant player in its sphere, have huge market opportunity, and have a large sustainable advantage. Ie, Gorilla and King qualities.
While I don't have years and years of history as of today I have two ten baggers in the last year and one 7 bagger. The two ten baggers include RMBS (via LEAPS) and BRCM via buying it very low, then buying it even lower via LEAPS and then just buying a truckload with all these earnings when it goes very low again. The 7 bagger is NTAP. I'm looking for Q to give me a ten bagger. Q gave me a 6 bagger which I traded for RMBS, which I cashed out when it hit the $300 and $400 range for the first time. Now Q is presenting a very compelling opportunity.
None of these moves have been "sure things" but they were all extremely good risk/reward manuevers. I guess you'd call it "trading" but it was all done with a long-term hold mentality, using G&K fundamentals, and just jumping on compelling opportunity as it came.
As of now the stocks I have not considered ever trading away are CREE, GMST, and NTAP. BRCM is now being added to that portion and if I'm able to get a truckload of Q in the morn (still working out the details as I have to sell something else to get some) it too will join that crowd. Leaving me with only 1 stock that I would consider trading (as I only own 6).
Thus to answer your question, trading on the margins of my portfolio has been the most profitable thing I have done, and it has been bolstered by my core portfolio which I seldom do anything with.
Tinker
tekboy/Ares@enquiringmindswanttoknow.com |
