Most people find it hard to believe that I rarely invest and trade stocks. One of the reasons for this stance is that I do not want to get involved in securities profiled in these and other pages. It sends a bad message, in my view.
When I do trade, I am patient and prudent. I always use limit orders to buy and establish stop-loss orders on sales. My biggest mistake tends to be selling too soon, but you can’t go broke taking a profit, as the old saying goes. Lately, I am off my game and on an annoying losing streak. If I am torn between two stocks I always seem to pick the wrong one. These maddening situations happen to us all, and like a baseball player that is on a hitless streak, we must be diligent to return to tip-top shape. Here are some tips to get you (and me) back to where we belong.
Stick with Familiar Names
We all have our favorite stocks to watch and trade. Like comfort food or a warm blanket, we relish in knowing how they trade. If you find yourself on a losing streak, build your confidence and your account balance by trading or investing in those stocks that have provided you gains in the past.
Spread the Wealth
If you are a putz like me that picks the wrong stock when down to two choices, remove yourself from this tortuous situation and buy both. Percentage gains may be smaller but achieving success is the best way to break a losing streak.
Take a Breather
We are often complacent in our due diligence and stock-picking approach. Work harder on the due diligence side, monitor the stocks on your watch list more closely and determine why these stocks are moving in their given directions. Trends tend to be short term in nature, which is why losing streaks occur . . . which is why not all strategies work all the time. It may be prudent to sit on the sidelines until your approach is in favor again.
Treat Investing Like a Marathon, Not a Sprint
Too many investors and traders in the small stock segment of the market treat transactions like a high-class form of gambling and are focused on short-term gains. This approach can cloud one’s thinking as stocks trade based on long-term patterns, news, and occasionally on specific events. Applying short-term methods to long-term opportunities rarely works. With each stock you buy, be prepared to go long for months or years at a time, as it may take that long to achieve meaningful positive returns. If you can generate a quick return, view that event as a bonus and not the norm.
There are always ways to generate positive investing returns -- even in bear markets. By keeping a positive attitude and building an aptitude for discerning what sectors or types of equities are performing profitably, you too can record positive gains in the face of adversity by emulating the successful approach.
We can finally rejoice in the volatility that has returned in recent trading sessions. This means opportunistic investors who are not comfortable with a great deal of market exposure have a chance to earn profits via day trading and swing trading. If you play your cards right, you also may find that this week may be the best week to do exactly that by trading the right stocks ahead of earnings reports.
On the surface, it may seem that trading ahead of earnings reports is an incredibly risky tactic. Plus, with hundreds of stocks reporting their second-quarter financial results this week alone, how does one discern the difference between a favorable opportunity and a poor one? While this tactic carries a good deal of risk, as do most quick trading ideas, finding the right stock is much easier than you think.
Longtime readers of The Stock Junction have likely noticed that I am not a maniacal follower of the yellow metal. That may be counterintuitive, considering my last name is Goldman, but, it is what is. I have only been passively following gold’s price movements in recent months weeks as I am a big believer that historically, small-cap equities is the place in which to be invested as we head toward the latter quarter of the year. Still, recent events have prompted me to wonder if now is the time to start buying gold.
First, a primer is on order. Since 2013, the price of gold has dropped significantly following an extended bull market, which largely occurred from 2004 through mid-2011 when the price of gold rose by nearly 400%. A slight drop from 2011 to 2013 precipitated the current environment of an oscillating price range from $1,200 to $1,400 per ounce. Interestingly, despite the decline in prices since 2011, the price of gold remains over 300% higher today than it was 10 years ago.
Few industry segments have received as much attention and notoriety as the marijuana space. Like many of you, I have been following the industry, and the stocks that (supposedly) represent its emerging leaders, with earnest. Now that much of the hype has subsided and valuations have largely been cut in half, the bloom is off the rose. Therefore, the time is ripe to address the “do’s” and don’ts” of marijuana stock investing.