steve: don't sell 
When to sell 'expensive' growth stocks when the business is doing great
- Thread starter Ghost of Cutten
- Start date
So if Amazon rallied up to 100 times estimated 2015 EPS, you would hold and not sell a single share?
You can't completely ignore valuation. That's the lesson of every bubble and subsequent crash.
I assume the 40 week? And do you prefer to use a close below as an exit signal, or wait for the MA to actually turn down first?
This is probably a good filter for at least part of the position. Good way to stay in for the blowoff portion whilst not having unlimited downside.
Ghost;
For Christmas, I ordered a copy of Dave Landry's "Layman's Guide to Trading Stocks"
I would recommend purchasing a copy, as it will give readers insight to some very specific techniques- that he has employed , to deterrmine how to take longer term swing trades and exit techniques along with some solid money management/risk criteria.
What I find particularly compelling about Landry's approach, is he is a price chart purist, without the use of a bunch of lagging TA indicators. He lays out a very straight forward and uncomplicated approach for trend trading and the market.
I wish I had picked up a copy of his prior books years ago, the "Bow Tie" method he advocates ( and wrote about then) has some similarities to the prior chart I posted in this forum I am considering to use in my IRA with weekly charts. He apparently illustrated this method some 10 years ago in a book then. As I have simplified my swing trading in recent years, dropping indicators, looking at price
As he points out in this book , good fundamentals do not necessarily make for a good trade because the market is not always rational. One can rationally "believe" a stock is over or under valued, and the price action can disregard that belief.
Read the book, he gives you a good framework for entry, exit, and also Reentries if the trend continues. As well as a way to look at the entire markets, and include them in your trading bias.
I think you'll find it applicable to your trading, and well worth the $60 purchase price.
Good Trading! SD
For Christmas, I ordered a copy of Dave Landry's "Layman's Guide to Trading Stocks"
I would recommend purchasing a copy, as it will give readers insight to some very specific techniques- that he has employed , to deterrmine how to take longer term swing trades and exit techniques along with some solid money management/risk criteria.
What I find particularly compelling about Landry's approach, is he is a price chart purist, without the use of a bunch of lagging TA indicators. He lays out a very straight forward and uncomplicated approach for trend trading and the market.
I wish I had picked up a copy of his prior books years ago, the "Bow Tie" method he advocates ( and wrote about then) has some similarities to the prior chart I posted in this forum I am considering to use in my IRA with weekly charts. He apparently illustrated this method some 10 years ago in a book then. As I have simplified my swing trading in recent years, dropping indicators, looking at price
As he points out in this book , good fundamentals do not necessarily make for a good trade because the market is not always rational. One can rationally "believe" a stock is over or under valued, and the price action can disregard that belief.
Read the book, he gives you a good framework for entry, exit, and also Reentries if the trend continues. As well as a way to look at the entire markets, and include them in your trading bias.
I think you'll find it applicable to your trading, and well worth the $60 purchase price.
Good Trading! SD
Ok I'll look it up, thanks for the recommendation.
Better late then never:
Thanks for the kinds words.
Email me if you have questions.
Cheers,
Dave Landry
I think the issue is that at times what starts off as a sound investment (reasonable valuation, prospects) can end up as a wild speculation (extreme valuation, prospects more than factored into price).
I think particularly today, in speculative issues you don't want to be rushing for the exits with everyone else as a bad quarterly earnings or shift in growth outlook from the company can really crush these overvalued stocks instantly.
At this point I think it makes sense to switch tactics in how you handle the trade. Sizing down is a technique, but I think that having a general understanding that your once "sound investment" is now a wild speculation is a good start. Also, find a more reasonably valued stock to shift the money into can make it easier to sell the overvalued one.
Lastly understand that only by luck will you ever do it "just right" with hindsight. There is not exact method that words every time.
I think particularly today, in speculative issues you don't want to be rushing for the exits with everyone else as a bad quarterly earnings or shift in growth outlook from the company can really crush these overvalued stocks instantly.
At this point I think it makes sense to switch tactics in how you handle the trade. Sizing down is a technique, but I think that having a general understanding that your once "sound investment" is now a wild speculation is a good start. Also, find a more reasonably valued stock to shift the money into can make it easier to sell the overvalued one.
Lastly understand that only by luck will you ever do it "just right" with hindsight. There is not exact method that words every time.