If anyone is interested in making money from the market’s ups and downs, then they should sell something when the market is up so they can buy it or some other security back when the market is down if they want to do anything other than buy-and-hold. Anything else is just a lot of noise to generate interest.
Brinker advised a fully invested position for his subscribers when the market was at a record high of 1565.
He then "called an all in" when the market was in the mid 1400's which some call a "buy signal" or a "bottom call." I call it good advertising since he already told people "all in the pool" at 1565. Granted it can be helpful for new subscribers who were dollar cost averaging to a fully invested position.
Unless you inherited great wealth, few people get meaningful infusions of new cash to lump sum into the market. Your 401K investments look like dollar cost averaging, but they are mini lump sums the day you get them.
Other than advertising, what good in “yet another all in the pool” call here in the low 1300’s after we already had advice to be fully invested when the S&P500 was 1565 and told to “go all in” when it “corrected” to the mid 1400s?
I, on the other hand, use asset allocation to guide me when to buy and sell. I'll often say something like "the market is up and I am taking profits" just like I will say "the market is down, we probably have a local bottom and I'll buy something now with the cash I have from taking profits earlier."
I will use an example of one of the stocks I trade around a core position, VLNC.
In January 2000, the stock was down so I added 1000 shares to my newsletter explore position at $1.37. By October 22, 2007 Valence was at $1.97 so I sold those shares for a nice $600 gain before counting the $24 in round trip commissions. I wrote in my newsletter that there was a gap in the stock back around $1.64 that I’d wait for a potential correction to fill where I might buy the share back. Sure enough, in January 2008 the market corrected hard and I was able to buy those 1,000 shares back at $1.64. We used an "Auto Buy" to pick up the shares. This is simply a "Buy Limit Order" you set at your broker (online or over the phone) ahead of time so your shares are purchases automatically. It helps buy in times of fear.
Last week great news came out for Valence and it soared to today’s closing price of $2.44!! Friday I put in a stop loss for those shares just below $2 that I might raise if it runs out of momentum.
Am I calling a “top” or a “bottom” just because I say “this or that chart looks like it could be a bottom” doesn’t matter. Of course not!
The chart above shows I did not buy VLNC at the "optimum" time but I did "good enough” to make nearly $600 on at $1370 investment (less $24 commissions.)
What matters is do I buy or sell and take advantage of the situation to make money.
Read my article Valence Technology: A Green Stock with Potential for more info on this company.
Remember past performance is no guarantee of future success, but someone has paid the bills for me to have a great life and leave the workforce at the age of 41 and still write about it for extra income at the age of 50 while living in a very nice place. If given a choice who to listen to, I would pick someone who has shown they are successful investingWhat matters is do I buy or sell and take advantage of the situation to make money.
Read my article Valence Technology: A Green Stock with Potential for more info on this company.
Remember past performance is no guarantee of future success, but someone has paid the bills for me to have a great life and leave the workforce at the age of 41 and still write about it for extra income at the age of 50 while living in a very nice place. If given a choice who to listen to, I would pick someone who has shown they are successful investing.
I don't monitor this forum so if anyone wants to discuss how I invest, then they are welcome to join me in "Kirk's Market Thoughts" at facebook's "Investing for the Long Term" to dicuss this article.
