Tuesday, April 19, 2011

Choosing simple model and golden rule

When there are many stocks to choose from, it is best to choose a model that is easy to follow. For example, the model I choose for HOC is complicated. Instead I should have chosen JAZZ.  It is in its first phase of rally. Not even in its extended rally.

I remember not understanding the continuing rally in Riverbed and Polypore and losing a lot of potential profits.
The best thing to do is choose stocks still in their first phase of rally and moving smoothly over the 30 day moving average with regular dips on the 30 day average. This is the simplest model to deal with. At least when I invest other peoples money I should use this model.

There are many stocks that doubled with this model like AZO, DLTR and many more. Today I found

I saw Jazz when it was around 29. Now it is 34.5. Hmmmm.

Endo is a big gamble. Lost money on it. It is still above 30 day average, but it has a history of not following rules. I should have observed the history carefully.

250 K is the target dude. When will you make it??? I may have to short a couple of stocks to get my money back like 6 K . Shorted NOG at 23 , will cover at 22. Have to do that a couple of times.

The Golden Rule is to always buy on the 30 day average. I didi not follow the rule with Endp and HOC, guess what, lost money. 

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