by Marc Lichtenfeld
1. When do you need the money that's invested in the market?
2. Do you have trailing stops?
3. Can you handle a downturn emotionally?
Source: The Oxford Club
1. When do you need the money that's invested in the market?
2. Do you have trailing stops?
3. Can you handle a downturn emotionally?
1. Value
2. Momentum
3. Quality
4. Size
5. Low Volatility
1. Don't Try to Buy at the Absolute Low.
2. The 'Cockroach Theory' Applies to Stocks.
3. Patience Is a Virtue.
4. Stay Disciplined.
5 & 6. There Are Two Types of Bottom-Fishing Plays - Over-Reaction & Value Play
7. Make sure you have a firm plan in mind before you enter.
If you’re doing a traditional Cowboy Split, you buy one-half of your usual investment “stake” – if you usually buy $1,000 worth of a stock, you buy $500 worth – at market. Then you put in a “lowball limit order” to pick up the second half stake if the stock dips.
Instead of halves, you cut your entries into thirds. Traders often do this because they want to pick up more shares at a discount but don’t expect a reversal of more than 10% or so.
The rule-of-thumb amounts with this twist on the Cowboy Split are a 10% discount on the second tranche and a 20% discount on the third.
Whenever you find a big gap between perception and reality, you can often make a lot of money.
I believe the perception-versus-reality gap is an even more important criterion for success than the value of whatever it is you are betting on.
If you want to outperform, you have to work on ideas that are “meaningfully different than the market consensus.”
1. Maintain a Long-Term Focus
2. Stay Diversified
3. Maintain Strategic Asset Allocation
4. Assure Adequate Liquidity
5. Pay Attention to Economy
1. Dollar cost averaging
2. Filter out the noise
3. Keep it simple
1. Markets Are Always Cyclical
The average bad market has gone down 41% over a period of 1.4 years, the average good market has gone up 480% over a nine-year period.
2. Don't Let Emotions Rule Investment Decisions
Substitution: Your brain can only think one thought at a time. When you are worried about the market, replace this thought with a positive one.
Skip All the Confusing Numbers and Go Straight to Operating Cash Flow
Before you buy your next stock, I want you to ask yourself three questions...
1. Do I know this company's business model well enough to describe it to a 10-year-old?
2. Am I comfortable putting at least 20% of my entire net worth into this stock?
3. Am I comfortable holding this stock for at least 10 years?
If you can answer yes to all three questions, congratulations... You have identified a wonderful long-term investment.
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