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Technology Stocks : CMGI What is the latest news on this stock?
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To: surfinSteve who wrote (593)6/16/1998 12:28:00 PM
From: Premier  Read Replies (1) of 19700
 
Olu:

The reverse leap frog system will work for stocks you think will go up but you are not certain. You are dividing your investment capital in four blocks. You have two blocks invested and two blocks will remain in cash part (or most)of the time.

Now let us assume cmg is a "forward leap frog" and will generate 20% annualized return over next three years. If you apply the above strategy your two blocks will earn 20% and remaining two blocks will earn money market returns part (or most) of the time.

Now let us assume cmg is a "backward leap frog" and will loose 20% value annually. The strategy will then make you loose full 20% because at some point you will be fully invested in this looser.

The gist of the explanation above is that you should have a conviction of long term direction of the stock and act accordingly. If the stock goes against your conviction you should accept your defeat and move out. This applies to both short and long positions.

Good luck to all.

Premier
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