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The second is that it is virtually impossible to forecast a top in advance (though it's relatively simple to do it while it's occurring). Thus overdue caution with regard to a possible top may prevent one from buying into a stock just when he ought to be doing so

But this is not really a problem. I have no illusion of forecasting a top or a bottom. What I have realized is that my money is very valuable and that I already own a lot of what I want to buy more of. If I'm patient I will find entry points which will give me a better return on my money. If for example CREE doesn't fall back to $100, BRCM may drop back to $115 or NTAP back into the $50s, etc. I don't have to feel stressed just to buy something because I have money to spend.

This only applies to incremental money. Once I have bought the stock I just let it ride. So with your incremental money your looking at 5-10-15% of your money at most. Overtime the patience you use will add up to many more shares than you would otherwise have owned while your already invested in everything else you want and will still benefit from any huge bull-market.

Back in February, with all this excess cash, I couldn't find any of the stocks I liked at a reasonable valuation so I spread my horizon and started buying more speculative names. The fact that nothing I wanted to buy was at a valuation I was willing to buy it at should have been a warning sign that I should hold off a little bit and have some patience. Perhaps I would have bought some more CREE at $135 than $90 (as it bottomed around there) but it certainly beats buying it in the $180s.

Some rudimentary market timing is involved, but your spreading it over all the stocks you own in your portfolio. Overtime different issues will be at better buying price points. At this time and place, if nothing has fundamentally changed with Q, buying more Q would certainly have to be at the top of the list. For me, buying more GMST made the top of the list each and everytime it hit $40, and then $36. Three different buys. And I can't say that buying at these points was luck, it was just taking advantage of what the market was doing. And this latest market drop fortunately gave me a lot of these buying opportunties to the point that I was out of cash within a few days of the market "correction" upward.

But even if the market had not given me that much leeway, I'd still always be at least 85% invested at all time, and more probably in the 90%+.

I guess I'm saying that market timing with extraneous dollars has begun to make sense to me. It is not a matter of guessing a bottom or a top but finding what feels like better buy-in points. Once bought in you ignore price if the fundamentals are correct.

Even Q last year, in all its greatness, had several crash points, all of which provided great buy-in points and were much preferrable to buying at $800. There is no way I would have predicted this current Q bottom. $140 was my idea of a bottom. So I'd buy in at $140, then double down at $100 and $65. Beats buying at $200, $175, etc. had I been buying into Q during its fall my buy-in points would have been $140, $100 and $65. As can be seen a poor job of predicting a bottom, but the best I could hope to do over time. (these figures are not arbitrary, they are the buy-in points I pondered on making overtime but instead opted for other companies). Just a matter of following a stock and making your best guess. If you miss out, well your just missing out with 5-15% of your assets at a time and another opportunity will come along.

Just something my experience has taught me over the past year and I thought I would share it. Also note that the old adage "catching a falling knife" is not without merit. That is why I stick only with premier companies in hyper-growth markets. I've caught more than one falling knife, as the GMST and Q examples indicate. Just catching them at lower prices is far better than catching them at higher prices all things being equal.

Tinker

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