Quote:
|
Originally Posted by aceventura3
One think he has help me with is selling. I have a tendency to not take profits and hold a position to long or hope a stock will bounce back. Following his trading style I take profits sooner. On the buy side I now tend to average into a position, rather than buying all at once. After living through the Dot Com Bubble - I wish I had taken more profits when they were there, I was greedy.
|
I don't even want to think about how many 10s of thousands of dollars I lost because I just KNEW I was right and the stocks were good--after all, I wouldn't have bought them if they weren't good stocks, right? I now use the IBD 8% rule on losses--I violate it now and then, but rarely to good results. When something I buy drops 8%, I assume there is something wrong that I don't know about, and move on.
Back to Cramer--his rule about buying a little now and a little later is one of the areas where he conflicts with William O'Neill's philosophy, and I've not figured out yet just which way I want to play it. O'Neill thinks that if you have picked the proper entry point, you shouldn't buy in stages--you MIGHT add to a position if it is rising and you have some cash from another sale, but you never average down, according to O'Neill--don't try to catch a falling knife.
As for rules about selling, I think O'Neill and Cramer are pretty much on the same page, although O'Neill seems to have more disciplined rules, whereas Cramer operates on guidelines.