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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  8:59 AM
Author:  leaderoftheback Number:  889 of 1287

Keep your heads about you, mates. These are classic signs of a market top. Stocks with high multiples are most at risk. I'm not a permabear, but I'm always skeptical.

Jim- I would have been a jerk to thumbs-down your GNRC pick when you made it, but you did buy it after a run-up. Chances are super high that you could buy it for much less. Even with good reasons to buy now, it pays to consult the (basic) chart. Taking positions for 10-20% less can make a huge difference over time. GNRC will (almost) certainly retrace to $30 (would improve your performance by 13% if you buy at $30 and it returns to $34); if there is a strong market-wide downdraft, it'll (almost certainly) revisit $25 (a 36% improvement in performance if you buy at $25 and it returns to $34). There is also a significant chance that it will see the low $20s sometime in the next 52 weeks.

I don't point this out idly...I've enjoyed your ideas and research, but I think your portfolio suffers from the most elemental timing issues. This is different from "timing the market." It's simply recognition of the way most share prices move most of the time. Patience is very much a virtue...always.

All the best to you and your MUE.

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