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Strategies & Market Trends : Ted Warren's Investolator
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From: Investolator20245/2/2024 5:56:42 PM
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Hi All,

I am new to this board so allow me to introduce myself. I use a modified version of Ted Warren's approach. I combine Ted Warren's approach with Bill O'Neil's approach of buying shares in companies that are exhibiting above average growth because I find those stocks can have really monster runs if they're breaking out of long-term bases (like TSLA in 2019-2021 or SMCI in 2021-2024). Also, unlike Ted I use stops because no method has a 100% win rate (not even Ted's) - if a stock has a monthly close below whatever the 20-month moving average is the month I buy the stock I'll cut it. For example, if I buy a stock that breaks above $5 and the 20-month moving average the month I buy a stock is at $4, I'll cut the position if the stock has a monthly close below $4. If I don't get stopped out, then I'll just ride the trend until it either ends or goes parabolic.

I find cutting losses this way limits losses to 20-25% on average and the stops are still wide enough to give a stock room to breathe. If for instance, your average winner is 200%, you only have to be right 11.11% of the time to breakeven if your average loser is 25% - if you're right more often than 11.11% of the time you're profitable. You should be right far more often than 11.11% of the time if you're using Ted's method to pick stocks (even if you use loose stops like I do).
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