A really good two days.

Some (of my) standout performers in two days since Tuesday:

CELG from $110.1 to $116.5 = 5.8%

SWKS from $68.1 to $73.2 = 7.5%

SKX from $53.95 to $58.35 = 8.2%

SYNA from $64.75 to $69.4 = 7.2%

WAB from $83.95 to $87.70 = 4.5%

AIOCF from $14.12 to $15.20 = 7.6%

FB from $74.7 to $78.4 = 5.0%

XPO from $37.95 to $40.5 = 6.7%

POL from $34.95 to $36.7 = 5.0%

AMBA from $45.80 to $48.55 = 6.0%

That’s awfully good for two days, and shows a happy Mr. Market rather than any skill on my part. I don’t know what tomorrow will bring, but it does show the advantages of staying fully invested in the market.

Saul

6 Likes

This market just refuses to quit. I thought this time we finally had the correction we all have been expecting. Well, no.

FMD from $1.76 to $4.85 = 175.6%

The IRS dropped the NOPA that was threatening to bankrupt the company.

First Marblehead Announces the IRS Is Withdrawing Its Proposed Adjustments

http://finance.yahoo.com/news/first-marblehead-announces-irs…

There must be a bumper crop in hay or whatever it is that powers reindeer. The Santa Rally seems to be on after all.

Denny Schlesinger

2 Likes

What I was trying to say is that trying to time the market is a losing business. Two days ago all anyone was talking about was the fall in the price of oil and gloom and doom. Noone, but NOONE, predicted that all these stocks would be up an average of about 6% in two days. Certainly not me.

Best,

Saul

3 Likes

Yep - looked good for me across the 2 days - especially the cyber security stocks as well as cloud, IoT and semiconductors.
Ant

As a young, novice trader (in my late 20’s), I went against Saul’s philosophy of staying in and not trying to time the market and paid for it.

At the first sign of the market upswing on wednesday, I sold off 80% of my portfolio, believing the stocks would plummet late in the day like they had the previous several days.

Long story short, gained a little before I panicked and sold out, but could have been 5x more had I the confidence to stay in.

You live and learn.

Sweetadeline

2 Likes

Just treat it as a great lesson to learn the hard way.

I hope this lesson pays off well for you in the future. Meaning, I hope your future returns are great.

Fool on!

mazske

1 Like

Hi,
I guess I"m finally learning. Before finding this board in the past when the market kept dumping I just sold out and waited for awhile and got back in after it went back up again. This time I just kept looking at the news and info on this board and found that our companies are doing just fine and the market will catch up to them. Sure enough it looks like that is what’s happening. Now I hope our earnings reports will cooperate.

Gayle

PS- Saul, don’t forget UBNT is up about 8% for the week.

3 Likes

Here are nine surprising things Jesse Livermore said regarding excessive trading:

1. “Money is made by sitting, not trading.”

2. “It takes time to make money.”

3. “It was never my thinking that made the big money for me, it always was sitting.”

4. “Nobody can catch all the fluctuations.”

5. “The desire for constant action irrespective of underlying conditions is responsible for many losses in Wall Street even among the professionals, who feel that they must take home some money everyday, as though they were working for regular wages.”

6. “Buy right, sit tight.”

7. “Men who can both be right and sit tight are uncommon.”

8. “Don’t give me timing, give me time.”
and finally, the most important thing:

9. “There is a time for all things, but I didn’t know it. And that is precisely what beats so many men in Wall Street who are very far from being in the main sucker class. There is the plain fool, who does the wrong thing at all times everywhere, but there is the Wall Street fool, who thinks he must trade all the time. Not many can always have adequate reasons for buying and selling stocks daily – or sufficient knowledge to make his play an intelligent play.”

http://thereformedbroker.com/2013/08/03/nine-surprising-thin…

Sweetadeline, if you haven’t read Reminiscences of a Stock Operator you should.

Denny Schlesinger

Reminiscences of a Stock Operator by Edwin Lefevre
http://www.amazon.com/Reminiscences-Stock-Operator-Edwin-Lef…

20 Likes

Saul,

Thank you for posting your remarkable results the past 2 days. I’ll wager a few shares of WAB that the majority of readers of this board have also enjoyed the run up precisely because of the excellent research that is posted here daily on stocks you have purchased.

Our small fast growing stocks have not kept up with the market the past few months…a temporary historical aberration IMO. However, we may be witnessing a change in trend and a shift back to the historically more profitable small cap aggressive stocks favored by this board.

Those who have stayed the course and held because the story and earnings remained good, have been rewarded for their patience. Mr. Market may be smiling on our stocks and I intend on enjoying the ride. This time next year we will be glad we did.

Jim

4 Likes

As a young, novice trader (in my late 20’s), I went against Saul’s philosophy of staying in and not trying to time the market and paid for it. At the first sign of the market upswing on wednesday, I sold off 80% of my portfolio, believing the stocks would plummet late in the day like they had the previous several days. Long story short, gained a little before I panicked and sold out, but could have been 5x more had I the confidence to stay in. You live and learn. Sweetadeline

Hi Sweetadeline, It’s lucky to be learning those lessons when you are young and just starting out, and the amount you are investing in the market is less than it will be later on. Also good that you were able to recognize a principle out of it. Some people would have just said “Oh, the market always moves against me!” or something like that. Keep working at learning and you will become a skilled investor.
Best,
Saul

For FAQ’s and Knowledgebase
please go to Post #4490

4 Likes

Saul, don’t forget UBNT is up about 8% for the week.

Hi Galba, Yes it sure looks at this point as if I was wrong about UBNT. They must have said some things in their annual meeting that reassured investors.

But isn’t that a beautiful illustration of the principle that “you don’t have to be right about the stocks you sell, just the stocks you keep” or “it doesn’t matter what the stocks you sell do after you sell them, as long as the stocks you hold do well” or “you can’t be in all the stocks that are going up. what matters is that the stocks in your portfolio go up”.

In general, I never regret a sale. I always figure I acted on what seemed right to me at the time. Sometimes I change my mind later as new information emerges or the situation changes, and buy back a stock I previously sold. If so, I pay no attention to the price I sold it at, but treat it as a fresh purchase, and decide if I want it at the price it’s at.

Best
Saul

For FAQ’s and Knowledgebase
please go to Post #4490

8 Likes

Hi Saul,
I’m still underwater on UBNT. I was late getting to the party so I was so far down I couldn’t sell. I did sell some of my holding but held most of it. I will be watching very closely through earnings and still might sell all but I am just trying to get some of my losses back. I probably could get out now but not sure what to buy in it’s place.
Thanks for all your help.

Gayle

I’m still underwater on UBNT. I was late getting to the party so I was so far down I couldn’t sell

Gayle, there’s no such thing as “I was so far down I couldn’t sell”. The stock price has no memory of the price you bought it at. It’s at the price it’s at. That’s the reality of now. The question about any stock (I’m not specifically talking about UBNT here at all) is “What decision should I make about it now, at its current price and its current prospects?” Not, “What price did I pay for it?” unless you are planing for tax losses or gains. This is a general principle, not a stock-specific remark.

As far as not knowing what to do with the money if you sold it, you could go back to the post #4788 at the beginning of this thread, and spread the money among those stocks, and do pretty well.

Hope this helps.

Saul

7 Likes

galba1931,

I understand exactly what you’re saying with UBNT. A month or so ago I watched CREE oscillate from $33-36 over the course of a couple weeks, I bought at $33 (devoting about 75% of my portfolio to the stock alone) thinking I was a smart, savvy trader.

CREE tanked, I did some research on the stock and realized it wasn’t the best investment and sold out at $31 ten days ago. It closed today at $31.21.

Had I stayed in, I would be at virtually the same point I was 10 days ago …Saul’s strategy of selling on stocks you lose conviction on instead of holding your shares hoping that it will rise back up is spot on.

I took the loss, and invested in better alternatives and now I’m back to even portfolio wise before the CREE investment mistake took place. Had I stayed with CREE and tried to ride it out, I’d be down 4% in my entire portfolio.

Sweetadeline

1 Like

bought at $33 (devoting about 75% of my portfolio to the stock alone) thinking I was a smart, savvy trader.

That sounds like an oxymoron. Investing 75% in a single set you up for HUGE losses and is anything but savvy. I don’t mean to be harsh, but it’s better than learning the hard way. I’ve seen peoe get wiped out after putting 100% in a “high conviction” stock or trade. There really is no such thing as a sure thing. Personally, I limit a single holding to 10% and it has to be a financially stable and profitable company. Limits for
More risky stocks is much lower.

Now an exception might be if you are just at starting out and this 75% can be quickly (months not years) replaced by excess earned income. With that said, I think it’s good to establish good habits now.

Chris

2 Likes

I would second what Chris just said. Putting 75% in ANY stock is terribly risky, to the point of being idiotic. I recognize that using the word idiotic is harsh and rude, but it’s better to shock you now out of doing something you’ll really regret some time in the future.

Look, it’s a little like playing “double or nothing”. You start out with $1 and win, you have $2. You win again, you have four. You win again, you have $8. You keep betting it all and next time you lose, and you have $0. Granted you are betting 75% instead of 100%, but that’s just a matter of degree. With large bets like that you only have to lose once to devastate you.

Saul

4 Likes

The trouble about “sure thing” or “high conviction” stocks is that you are seldom the only one to figure it out, thus the stock is priced sky high. At the slightest stumble in the prospects of the company the price may collapse way out of proportion to the news. So even if the company itself is an almost sure thing the stock price seldom is.

2 Likes

You guys raise valid points.

To get a sense of where I’m coming from, my portfolio is probably a fraction of most of the veterans on the board. Before I changed my strategy to going all in on 2-3 companies, I had about a dozen stocks, many of which are picks that came from this board and my portfolio increased modestly over a couple months…the problem for me is when I can only buy 50-100 shares of each company, some of which are very pricey (for me at $75-110) per share, my gains are only minimal even though the companies are winners and the strategy is working.

I’d like to be able to support myself completely off trading; if my portfolio were 10 or 20x the size it is now I would be able to spread my positions out and live comfortably.

Instead I feel I have to put all my chips in, buy several thousands shares of a company or 2 that I believe will go up and therefore earn enough income on a trade to make it worth my while.

Saul, I understand your analogy of going from $1, to $2, to $4, to $8, to $0…but I’m not investing in high risk companies that will go to $0 or anywhere close to $0.

Any advice and/or criticism is welcome, I’m open to anything without being offended…I’m here to learn.

Sweetadeline

Any advice and/or criticism is welcome, I’m open to anything without being offended…I’m here to learn. - Sweetadeline

I hesitated to offer comments because I feared you’d consider them adversely. But, heck, you asked so nicely and seem so earnest, I’ll offer a bit of advice gleaned from three+ decades of investing:

  1. Don’t go for the “quick kill.” The odds are against you. Everything you learn about a company is already well known to high-powered investment houses, most of whom have already placed their bets before you even woke in the morning. Don’t try to beat the pros. They eat retail investors like you and me for breakfast, lunch and dinner.

  2. Invest in good companies, growing steadily for good reasons. You mentioned your “misadventure” in CREE. That kinda resonated because I know for a fact that CREE is downright hated by many ('cuz they bought high and sold low). Me? I’ve quintupled my profits in CREE over the past 20 years. It didn’t happen quickly (note the 2 decades part), but CREE has grown steadily year-over-year (sorta) and decade-over-decade (definitely). Find a good company with a good product and a strong moat and stay with it (OK, OK, swing trade when you get the confidence - that’s what I do).

  3. BE PATIENT!!! Don’t day trade, don’t act in response to short-term Market swings. Get to know the companies you own. Understand when the stock price has been beaten down unfairly. Understand when the shares have become overvalued (the Market pendulum ALWAYS swings too far in each direction). You gotta understand the companies you own. The longer you hold them, the better you’ll understand them. BE PATIENT!!!

  4. KEEP AT IT! Investing isn’t a passing fancy. Put to work whatever you can muster at the end of each month. Follow the market. Put money to work where you think you believe you’ll benefit the most. You will, undoubtedly, be humbled time and time again, but KEEP AT IT!!! You will learn, you will grow, you’ll become more experienced and sophisticated in your thinking and prowess. Investing mustn’t be a passing fancy. Rather, it must be a passionate and dedicated pursuit if you are to truly benefit.

  5. SMILE!!! You’ve already learned that investing is the road that can propel someone from being a “wage slave” to someone with means well beyond those made possible through mere salary.

34 Likes

Any advice and/or criticism is welcome, I’m open to anything without being offended…I’m here to learn.

Hi Sweetadeline. I presume you are pretty young, so I’d suggest you invest patiently, with the goal of trying to make, let’s say, 25% per year average, on your entire portfolio, instead of putting it all in one stock to try for an instant killing.

For example, that 25% per year turns $1 into $9.30 in 10 years, but then, amazingly turns that $1 into $86.30 in 10 more years. I don’t want to blow you away but in 10 more years (30 years) that $1 would become about $802! It’s the power of compounding. That means that if you started with $100,000 and never added anything you’d have $930,000 in 10 years, $8,680,000 in 20 years, and $80,200,000 in 30 years. Now there’s a good chance that you might not be able to successfully average 25% per year, but you will also, undoubtedly, be adding money every year, and thus will hopefully end up at about the same place, plus or minus ten million or so.

As an aside I know someone who works for a discount brokerage firm in their “Active Trader Division”, and he says almost no active traders make money, and almost all of them lose money. Just a cautionary tale, about the advantages of patient investing.

Saul

5 Likes