Dumb question or dumbest question?

It's a wonderful idea if you can make 40 or 50 straight winning picks in a row. But what happens if you have two losers out of the first 40 positions and they're the first two picks? Position one announces terrible news and it gaps down 25% in one day. Now you're down $100 and you need 4 straight winning picks to get back to break even.

Instead, you're second pick gets clobbered similarly. Now you need 9 straight picks to break even. Seems reasonable. Two losers and 38 winners. The harsh reality is that you're never going to win 19 out of 20 trades.

What's missing here is risk management. What's your plan for losing picks? If you can have a somewhat better than a 50% win rate and make more on the winners than you lose on the losers, you'll make money. Do that and you'll have a shot a making some money consistently. Harsh fact? Most day traders lose money.

 

50 consecutive picks that each go up 10%. You would be making a lot of money with your own financial show. Probably never been done. My suggestion would be to do some research and find out if you can figure out what your goals and motivation are to reaching financial goals. Find people in their 60's and ask them what they did that worked. Using people who have been down the road you are travelling will allow you to learn from other peoples successes and failures

 

The only DUMB question is the one that is never asked. So far you have 3 good answers and all are correct. The guys that are new to the market and dream of becoming the mega rich traders are most likely the ones that never survive, that is a proven fact. The easiest way to blow up your account is to jump in blind with high hopes.

That being said, a very small percentage have learned how to swim with the sharks and not become their prey.

Some trades are easier than most, I tend to lean in that direction and have great results.

RKT was a gift, it was heavily shorted, they announced a surprise dividend which drew a lot of attention and created a nice squeeze that was very profitable to those that played it on the option side.

GE recently announced a intention to RS, again that was a gift. Those that are aware of the results were able to join the party on the option side and enjoy the ride down for some nice profits.

Those are 2 examples of easy money when properly executed.

On the flip side, I consider myself experienced and have good results. To this day I have NEVER had a 100% success rate and accept the fact that I never will.

Before blindly jumping in as a follower, first educate yourself and do some homework. You may have better results at investing as most that shoot for the moon end up shooting their self in the foot.

 

Welcome, trader Turtle.

The problem is this:

Let's pretend X does as you hope. While you're hoping to get rich quick with Y, what is X doing? When you give up on Y, sell at a loss, and buy Z, what is X doing?

If X is a well run company, it will continue to go up.

What if Y is in the tank and X keeps going up? Would you consider staying with Y until it recovers, then selling to buy X or perhaps taking a chance on Z?

You are talking about surfing an ocean of random price fluctuations, hoping to take gains and avoid losses. This is a gambling mindset and it is one that nearly everyone here shares.

Also, selling X and buying Y does not "solidify" your net worth. Your exposure to the fluctuations of market valuations is identical to the long hold who does not buy or sell based on price. This idea is a religion, founded on nothing. It is, however, a widely held belief.

Let's go back to companies X, Y, and Z. How are they run? What is their intrinsic value? Are they in a position to generate revenue? If not, when will they be?

The company that is run the best will do the best, over time. It's as simple as that. If company X is the best run company out of X, Y, and Z, you would be better off to buy X, hold it, and forget about Y and Z.

I recommend reading the primary trading threads on this site. Look for *QUANTIFIED* cited returns. I did not see anyone who cited a number higher than the S&P 500 in 2020. I didn't see it in 2019, either. In fact, I haven't observed credible evidence of anyone beating a broad index, long term, in the 40+ years I've been in the equity markets.

Also, I see endless thought processes of trying to do as well as ARKK, VOO, BRK-B with variations on their strategies.

Let me explain to you how you can do just as well as Cathy Wood, the S&P 500, or Warren Buffett. I'm not talking about getting close. This approach will get you identical returns to these three outstanding investment metrics.

To do as well as Cathy Wood, buy ARKK and hold it for a long time.

To do as well as the S&P 500, buy VOO and hold it for a long time.

To do as well as Warren Buffett, buy BRK-B and hold it for a long time.

Long term success is at our fingertips but we are all so busy trying to re-invent the wheel that few of us are getting anywhere while a nice warm car is idling, waiting to take us where we need to go.

By the way, I'm and old guy, I'm grumpy as hell, and I'm pleased to meet you.

 

Let me be clear.

It's possible to out perform the S&P 500. As proof, I give you Berkshire Hathaway. They have not done it recently but they did outperform the S&P for the majority of their existence as an investment trust. As a textile manufacturer, Berkshire's performance was decidedly less positive.

Everyone wants to try their hand flying the 747. They start fiddling with knobs and levers they know nothing about, thinking God may guide them to greatness. Maybe they will pull the sword from the stone? Somebody has to be that one in 10 million!

From what I can tell, the majority declare themselves a wild success from their first day of trading. Many roll into forums and declare that everyone should listen to them because their methods have gotten them rich quickly. This is how religions are started. Some lying sum-bitch thinks he is the reincarnation of divine greatness and has a burning need to have a congregation.

Even though we expose charlatan after charlatan, new people come in and legions of people seem to think, "Sure, the last 9,999,999 people have been blow-hards but maybe this is the guy!"

If you want to do well over time, nothing will do better than buying a well run company. Forget stock price. How well the company is run is all that matters. Are they honest? Are they hard working? Are they smart? Those are the three questions and that is the correct order of importance. Buy that company, hold it, and do very well while legions of people discuss shelves, triangle patterns, and sun spot interaction with the market valuation of the instant. Sell this company when you see evidence one of the three primary questions no longer has a positive answer, regardless of stock price.

You can also do well with VOO. Just buy a broad index of the S&P 500 or Russell 2000 and sit on it until you retire. Make sure it has a low expense ratio, as you don't want someone else siphoning away your money. This technique will do better than *EVERYONE* in your peer group, including people in "well run" pension plans.

 

I have not been investing for long so take what I say as worth a grain of salt. I mostly agree with Tom but the original question has some merit.

Finding a stock that grows 10% in x amount of time is way more likely than finding one that grows 25% in x time and that's more likely than finding one that grows 50%. Given that, buying something that grows 10%, and then buying something that grows another 10% is a great way to grow capital, IN THEORY.

The problem is that even stocks of best run companies fluctuate and have down periods. Therefor buying in the way the original poster suggests is impossible as you will always make buys that seem like it should be a winner but fails spectacularly for no apparent reason.

I actually do buy and sell somewhat like the original poster envisioned. I look for companies with great fundamentals, I consider selling when gains reach 20 to 25% and I usually sell when losses reach 6 to 8% below buy. If I get 1 good stock that reaches the 20% then I am ahead even if I have 2 that don't work out.

I am up over 7% ytd but I've only been doing this for a few months so I am not swearing by the methodology. I also don't know how I would be if I just held on to my original stocks instead of selling. I think I'll try to figure that out over the next couple of days if I have time.

 

OK, I figured out where I would be if I had left my original investments alone. Was kinda easy actually.

If I left all my original investments alone, I would have gained over 20% possibly 21 or 22%. I can't be real precise because of the time to take figuring out past dividend payments. My current strategy has grown me only 15.4% although that would have been over 17 or 18% if not for mistakes made when I didn't know better that I would like to think I wouldn't repeat.

In my original holdings, I was very heavy oil/energy dependent.

So buy and hold wins out.

 

I always tell that to my friends, take small profits instead of trying for a home run every time. In other words, don't be greedy

 

Greed and fear are our worst enemies. Instead of striking out, its best to walk them home one base at a time. Choosing a solid team is the key player.