Top Stock Picks Portfolio Comments
2020-01-20: We received a signal to exit our position in **** and rotate into **** in the mutual funds portion of our portfolio. Also, **** is close to hitting our target price of ****.
Current Stock Portfolio Positions: TD** (+18%), GS** (+9%), BR** (+5%), MA** (+4%), CA** (+4%), TB** (+3%), JB** (+2%), CB** (+1%), RO** (-1%), SH** (-2%), LO** (-4%),
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Our Stock Trading Rules
- Every trader must have a profit and loss plan - a blueprint, if you will. Without a plan, you will lack the discipline to control your emotions, which is your biggest enemy.
- Always determine up-front the maximum loss you can take on any trade. Losses should be limited to 7% to 8% maximum. This is one of the most difficult rules to follow and requires tremendous discipline.
- Once your position shows a gain of about 20% to 25%, or 3 times your risk, you must nail down profits. Sometimes, an outstanding winner comes along, and it is time to be a pig. You need to milk these winners to the max.
- Do not take profits on your entire position in the first 4 weeks. If the stock has raced up 20% in a few weeks, you can sell half your position, and hold the balance for a larger move.
- Holding onto winners requires courage and patience. You can continue to sell half your position at regular intervals as the stock advances. Raise your stop loss based on support and resistance points, or any other timing mechanism you prefer. After a strong uptrend, most stocks WILL flash sell signals that WILL get you out before the peak. Recognizing these signals is the key.
- Losing is part of the game. Good traders always know they will come back to win, and do not worry about looking stupid because they have lost in some trades. In fact, you will probably have more losers than winners. However, your losses must be kept small and you should allow your winners to run.
- Manage your portfolio risk correctly. Initially, do not invest more than 5-10% of your portfolio into any single stock. Aim to hold 6 to 10 stocks in your portfolio. This will minimize the negative effects a single name will have on your portfolio.
- Learn effective money management. Pyramid up (buy more shares) when the stock moves in your favor. Always channel your money into profitable positions. Pyramid down, only if you absolutely know what you are doing. In other words, don't.
- There's always the Wall Street fool who must trade all the time. If you find that most of your last trades have gone against you, scale back and rest awhile. The market may not be right for your style of investing. Remember Lefevre in Reminiscences of a Stock Operator, "It was never my thinking that made big money. It was always my sitting." It takes discipline and patience to sit tight and not over-trade.
- Do not day trade.
- There's more to life than trading.