Wayne:
The book you refer to: "Value Investing: From Graham to Buffett by Bruce Greenwald" is a good one, IMHO.
The following are some answers to your questions, albeit I doubt that they will be of any help to you.
<<1. Do you have a specific holding period, or do you "let your profits run and cut your losses short"?>>
No specific time period, or as Jesse used to say: “Instead of hope you have to have fear and instead of fear you have to have hope” (If you haven't read that book send me a P.M. and I could send you a list of some of his "maxims".<g>)
<< 2. Do you place stop losses, and if so do you have a system for doing that?>>
I think it is always best to have a “mental” stop loss and try to keep it.<g> The main rule on that is to always try to adhere to the rule #1 on investing attributed to Warren Buffett: “Always try to avoid losing money.”.<g> If you picked what you believed to be a good entry point and the stock's behavior doesn’t turn out as you had planned it is best to part with it as soon as possible. If the stock is acting well keep with it until you can detect a change in the trend.<g> When you have more than a 100% profit and you decide to sell its is usually good to keep some token shares with the idea that "your cost is zero". Sometimes you may be surprised to see that your decision to sell and take profits was not the best one.<g>
<<3. Do you keep detailed records to quantify your gains or losses, or do you do so well that you don't want to bother with the hassle of doing that?>>
Nowadays I try to do most of my trading on “non-taxable” accounts. That way you don’t need to do too many calculations at “tax time”.<g> Also I think it puts a little more pressure on you on trying to cut losses early. (especially when you are aware that you are no longer able to add some fresh money to the account.<g>)
In the old days, if you had a sizable amount of short term profits on a taxable account, you could try to move them to the following year by using a commodity straddle, taking the loss before the end of the year by switching months and then taking the locked-in profit the following year. If you picked the right commodity, and since the required holding period was only six months, you could not only defer the taxes for one year but in some cases also convert the short term to a long term gain.
<<4. Do you always use the 5 day and 200 day m/a for the crossover signals? >>
No. I most frequently use 3 average lines: “short, intermediate and long term”. The intervals depends to the time frame of the chart ( 15 minutes, hourly, daily, weekly). More often the ratio I use is 10-20-50 but sometimes I adjust it depending on which ratio gives me the most satisfactory information of the change on the trend for a particular stock.
RAGL
Bernard |
