The last time I made an investment suggestion, I followed my on advice and it cost me dearly. <g>
There are two risks. If you don't own any, it could shoot for the stars leaving you behind. Several stocks have done that to me. And if you own some, it could drop to half what you paid. Several stocks have done that to me too.
So my strategy is to take a small position at some arbitrary price, say $11.35, with the full intention of doubling & tripling it at lower prices.
I don't follow the situation closely unless I have some skin in the game. If I do add at lower prices, then I lighten up as things recover. Taking money off the table lets me double again at a later date if appropriate. I call this trading around a core position.
This is based on M Burke & Cary Salsberg concepts of investing in thirds, at predetermined price levels (adjusted as required by new information).
What I've learned is that picking the exit point is just as important if not more so than the entrance, and usually more difficult. Lower commissions these days make easing in and out of a position viable.
In my own case, I'm holding back a bit for the last week in December, which last year proved a very opportune time. I have added some in the Oil & Gas sector, but just 'Toe wetting' positions, as Zeev would say. If HMTT were to drop to $10, I'd have a very difficult time not picking up at least a hundred shares. |
