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Author: Rayvt Big gold star, 5000 posts Top Favorite Fools Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: of 250205  
Subject: Re: Does this stuff work ? Date: 2/12/2013 5:36 PM
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My Sell-to-Buy system might be relevant to this thread, as it deals with the selling dilemma:

This set of rules is almost completely hindsight bias and Look-Ahead Bias, and hence useless.

8. Sell all on market crash (10/10/2008 and 3/3/2009).
Define "market crash" -- in such as way that it can be identified at the time, and not just in hindsight. Do you mean to sell _before_ the crash? Good luck being able to predict the near-term future.
Or do you mean to sell _after_ the crash? Which means that you lock in your loss and miss out on the gain if you've sold at the bottom.

So after you've sold, how do you know when to buy again? These rules don't say anything about that.

To buy your 4th holding, only do so if you best holding is showing at least 5% profit.
Huh? What does stock #1 (hest holding) have to do with stock #4?
Where does the money come from to buy stock #4?

Track your stoploss companies (including those you did not buy) and rebuy if they fall below 50% of original price.
What does "those you did not buy" mean? Is this (these?) the #4(s) that you didn't buy because nothing went up 5% (#3)?
And why, oh why would you buy a stock that lost 50%???? Some sort of belief that what goes down must come up? 'cause that's not true at all.

How long do you keep track of the #4 stocks that you haven't bought yet? Do you periodically re-evaluate? If not, why not? It doesn't make sense to buy a stock _now_ just because you liked it a year ago. IF you periodically re-evaluate the desirability of the (unbought) #4, why wouldn't you also periodically re-evaluate the other 3 stocks that you did buy?

These rules only say to sell if a stock loses 40%, or if the market crashes. That seems rather incomplete. What if a stock goes nowhere, or goes down 10%=20% and stays there?
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