That is what I recall also.
If a stock moves 20% in less than 4 weeks hold for a big move although there was no specific method of getting out. The 10 week MA was mentioned.
Stockpickers and mediocre returns
- Thread starter Flowfollower
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If a stock moves 20% in less than 4 weeks hold for a big move although there was no specific method of getting out. The 10 week MA was mentioned.
I was referring to canslim to catch those names that come on your radar in the early stages of growth before they become super stars. I have used it with a cup and handle formation and even a one dollar stop. When the stock did move,you can just wait to the first 100% gain and sell 2/3 of it. The other 1/3 hold untill the earnings and growth is gone for two years in a row.
That's just hindsight bias. If you don't believe that is the case then please let me know which stock will rise 1000 fold from today that you have also put all of your money on?
Of course CANSLIM would have identified AMZN 20 years ago. However CANSLIM would also have identified many other growth stocks that looked like having very bright futures but never became anything.
So to capture the AMZN position one would have had to have diversified significantly. This then leads to the issue that the multiple other positions would have been the relative weak performers - thereby diluting performance which is the point of this thread.
Outliers are called outliers because they aren't commonplace.
Look at stocks making new highs. If you are going to double, then double again you have to make new highs.
Look at stocks that are on the cutting edge with lots of growth potential. (new industries; new technology)
Develop a strategy to get out of non performers. Diversifying hides your mistakes. Recognize and deal with them.
Cut losers add to winners.
Wouldn't work with most stocks, not even amazon, but you could have taken quite a chunk out of the run up.
Look at stocks that are on the cutting edge with lots of growth potential. (new industries; new technology)
Develop a strategy to get out of non performers. Diversifying hides your mistakes. Recognize and deal with them.
Cut losers add to winners.
Wouldn't work with most stocks, not even amazon, but you could have taken quite a chunk out of the run up.
I can not tell wich one would go 1000 fold.
Trading and investing is not about prediction, it about letting your winners run and cut the losers.
I think you need to look at some other things. You have concluded that the diversification would kill the performance of an outlier and that is not true. If you have a 100000 dollars and you take up to the best 20 canslim candidates today, you put 5000 dollars in each of them. You do not risk the 5000 dollars. You risk the difference between you entry and your stop. Let's say you are stop out of 19 of them. And your total loss is 8500 dollars. You take the reminder of your portfolio and go for the next 20 best of canslim at that moment. So 95000 - 8500 = 86500 dollars to invest to the next round. 4325 dollars in to the next 20 stocks. 19 stocks you are at a loss. You now have two stocks going to where ever they want to go and 38 losers. Your capital without the winners is now around 80000 dollars. You repeat the process over and over again. You will catch the outliers. And only one of those outliers need to perform like Amazon or Apple.
5000 dollars invested in Apple at that moment that it came up on canslim screen is now +- 2 million dollars. Talking about how you can "hang on" is another part of a trading system. You could sell half of your position on a long term technical output going against you. And you 'forget' the other half and write it off in your mind. You are babysitting that part for the next generation in your family. There are endless possibilities to make this work. I do it, so can you.
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Sure does/AMZN has been on their[IBD] charts/many times.NO body catches all the move; but
his can slim/555 page book.............................................is well worth it.
Most libraries have a copy; + as you know/he never just suggested one stock, no matter how well it does......................................................................................Good tech trend; like ETFs myself
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Mostly right;
but his color book/can slim book has quite a few selling plans/principles.I still have his old black/white charts can slim book; but other book is improved.................................
Dug out my copy. 2nd edition. Copyright 1988.
Still worth reading. It's one of the books I recommend to anyone who is interested in stocks.
%%Dug out my copy. 2nd edition. Copyright 1988.
Still worth reading. It's one of the books I recommend to anyone who is interested in stocks.
Actuilly I got mine free;
50% of 52 weeks subscription. IBD did a poll/many never even read the free book.NO wonder so many have poor savings/investing habits...………………………………………………………….