Dr. Winton Felt

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Trade Stock Cycles or Buy and Hold?

Thirty years ago it made sense to buy and hold. Then, the cycles in which stocks moved had relatively small amplitude compared to the gain that could be anticipated for the year. Now, stocks swing in cycles with trough-to-peak moves comparable to what once was hoped would be the gain for an entire year. Obviously things have changed. Now, it is not uncommon for stocks to swing up and down within a few weeks to a few months as much as they once gained in a year, sometimes more.


Selling Strategies and Stop Losses

There are several ways to approach the issue of stop losses. Here are a few examples.


To Trade Stocks for a Living

People typically underestimate the amount of work that is necessary to learn how to trade stocks for a living. They seem to think stock trading can be learned in a few simple lessons. After all, isn’t it only a matter of learning how to “buy low” and “sell high,” or invest in “story” stocks?

How to Trade a Sideways Stock Market

When markets are moving sideways or in a trading range, moving average crossover systems and other trend-following systems are more often whipsawed. One day a stock will give a buy signal, and the next day it will give a sell signal. Professional traders will often abandon trend-following systems under those conditions. However, here are a couple of strategies that we have found to be quite effective, even when the market as a whole is not going anywhere.


Stock Market Investing: Long-Term or Short-Term?

To have a pre-disposition to buy and hold stocks for the long-term can be an extremely expensive frame of mind. The long-term market trend is up, but in a volatile stock market, the long-term gain is often laden with risk and not nearly as great as many short-term gains. Risk vs. return has greatly increased for the long-term stock market investor. People argue that tax consequences are their reason for holding. That argument lacks weight. It is very difficult for some people to break away from old habits and patterns of thinking about the stock market.

Do You Sell or Hold After Your Stock Has Dropped?

Do you sell or hold a stock that has had a big drop? Is it too late to sell? Whether your stock has had a big loss or small loss should not make a difference. Judging a loss by its magnitude is an arbitrary approach to risk control. For example, it would be a more rational way to control risk to base decisions on abnormal stock behavior, an inability of a moving average, trendline, or other line of support to keep a stock from falling below that support, or on a change in trend. Sometimes a switch to another stock makes much more sense than to continue to hold a declining stock.

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