Way back in the ‘70’s, Alvin Toffler wrote Future Shock, which predicted -- among other things -- that the pace of life was going to speed up. Speed up it did. Today for most of us the most valuable commodity is not oil, or gasoline, or coffee, soybeans or pork bellies, it’s time. Many of us can remember the promise of all the labor saving devices conceived in the 50’s and 60’s. What we have been handed was far more to do and less time with which to do it.
Life’s increasingly hectic pace has permeated the world of investing along with everything else. Real time quotes, end of day data downloads to specialized charting software, and 10 second order execution guarantees provide for trading strategies unimaginable just 15 years ago. Attitudes reflect this.
It is often said that one shouldn’t marry one’s investments. That is sound advice as things change and we need the objective awareness to recognize when it’s time to move on. This is not to suggest that we become cads, and pursue an endless succession of one night stands, moving in with and out of our investments with the same frequency that we change our socks.
The sometimes languid manner in which we do things at Confident Trader™ provides many benefits to our members. Chief among them is the time to observe and learn. This of course requires patience. For those not currently so endowed you will find ample opportunity to develop your virtuousness. The stocks we feature in our newsletter usually require a couple of weeks to get their acts together sufficiently to trigger the ‘buy’ signal. This provides time to research fundamental factors like revenue growth, earnings, cash flow, debt to be paid off, institutional involvement, insider buying and selling and the like.
Additionally, because at Confident Trader™ we believe that it is most advantageous to engage both halves of the brain (a picture is worth a thousand words) we incorporate stock charts and use this time to study the price and volume movements of the stock as it works its way up to the buy point. There is much to be learned about a stock by observing the inter-relationship between price and volume. This takes patience, which takes time, and time we have in spades.
Once the buy signal is triggered we confidently take our position and then patiently wait and continue to observe as the stock makes its move. The stocks we feature generally have a holding period of between three and five years. It takes time to make a big move. We observe at leisure:
- How quickly does the price rise?
- What is the correlation between price and volume as the stock approaches the next level of resistance?
- Is it repelled or does it break through? And if so how?
- When the company releases the next quarterly report, how are the fundamentals holding up?
Price and volume on the stock chart tell us how the market is reacting. Our timely updates alert you when conditions warrant a decision and suggest what factors you need to contemplate. You will almost always have a week or so to puzzle it all out. Is it time to take some profits? Maybe we will issue a sell recommendation. (We normally take profits in 20% chunks) Check the fundamentals, is there any fresh news? Do you agree with our recommendation? If so, why? If not, why not?
After a strong run-up it is normal for a stock to retrace and give up 20% to 30% of its’ gain. Momentum investors and other short term traders are bailing out and taking profits. Short sellers are getting into action, the price is falling fast. Experienced investors have seen it all before and take it in stride because they know it’s usually just a necessary and commonplace correction. For a beginner who is just learning how to invest in the stock market times like this can be particularly hectic, and many, without proper guidance will get shaken out of the trade at this point because fear and the survival instinct take over.
As a Confident Trader™ member you’ve been tipped off and are anticipating just this kind of action. If this happens early in the move, usually all that is required is patience (and perhaps a Dramamine or two!). However, it’s your decision, if selling 20% or more of your position makes you feel better there’s never anything wrong with locking in profits. It’s not all that hard. It just requires guidance, patience and practice. If at first you’re flummoxed and don’t know what to think or do, simply follow our lead and patiently observe how things play out. You’ll learn in time.
“We are told that talent creates its own opportunities. But it sometimes seems that intense desire creates not only its own opportunities, but its own talents”
Eric Hoffer
