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Real-Money Stock Picks / Messed-Up Expectations Portfolio
|Subject: Re: An excellent read -- and it fits right in||Date: 3/20/2013 5:13 PM|
|Author: TMFGebinr||Number: 890 of 1135|
Appreciate your comments and the fact that you're following along.
I hear what you're saying about stock price movement and entry points. However, I don't think it's very helpful to look at price charts (though I could be totally misreading your comments). I was successful twice in initiating a trading position on Meritage Homes (MTH), buying around $16 and selling around $22. I did that twice after noticing that pattern repeat 2 or 3 times before that. However, my second sell turns out to have been the wrong thing to have done that as the price didn't go back down, but continued to climb to the current $40+ level. I made money, no complaints there and I still own shares, but the pattern totally broke down. But that's the only one where I did that and I only did it because I had followed the company for four or five years by that point and was totally comfortable with trying to take advantage of it.
Buying into a new position such as Generac, I'd be pretty bad at unless there was a very clear up and down movement. And, having read that comment by the analyst that the share price generally moves down about 9 months after a serious storm (which caused an uptick in orders, therefore quarterly results, therefore share price), I looked and tried to correlate serious storms to Generac share price. And I just couldn't come up with anything that seemed reliable to me.
Value investors (and the MUE port is based on value investing) are notoriously early in identifying companies and buying into their shares. They often overcome (or mitigate) that by buying several times after identifying the company as an investment. I've done that in the MUE port with Transocean, buying at $63.94, $69.41, $55.99, and $48.99 and Power-One, buying at $8.82, $8.83, $7.48, $7.41, $5.05, and $4.10 (holy cow, six purchases).
I haven't done that with every position (Western Digital at $32.78, $32.18, $28.96, $40.77, and $48.86 or Apple at $328.62, $396.37, $371.36, $525.70, and $511.94, for instance) because I'm also trying to buy more of my winners even if that means at higher prices.
Finally, I'm operating under a constraint that individual investors may not be. I have to make 3 purchases a quarter -- it's one of the rules these ports with TMF's money are supposed to operate. That can be existing positions (and for much of the past six months, they have been) or a new position. So, when I come across a compelling new idea (like Generac), I usually don't have the luxury of waiting for a lower price.
Finally, if Generac's price does take a significant dive, I'll likely add to the position.
Anyway, thank you much for your comments. I just don't think I'm very good at identifying best (or, at least, better) buy points. :-)
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