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reddingrunner (94.73)

Momentum lesson

Recs

2

September 16, 2013 – Comments (0) | RELATED TICKERS: GAIN , WX , FDP

I haven't updated my HTO (high turnover, i.e. 3 months avg) report since mid-June as I've been travelling a lot but it has been going well as seen by the fact that my CAPS score has doubled since then (my CAPS portfolio is mostly based on the same screening process as my much smaller real-life HTO portfolio).

In looking back at the stocks I've sold the one clear lesson is one we've heard many times, I sold my winners too soon.  My plan was to sell solely based on my numerical rating system, regardless of whether the stock had gone up or down.  But the stocks that had done well usually continued to do very well after I sold them (when their scores went down- each week I sell the two lowest rated stocks and replace them). 

For example, ADUS rose 55% for me in three months and has risen another 43% since I sold it July 3.  LCI gained 75% in six months and has risen another 39% since I sold it September 9.  Some of my gainers haven't done well since I sold them, but they haven't lost much either so it appears that the opportunity risk from selling a winner too soon is greater than the risk of loss from holding on too long, at least when my ratings score declines to a mild sell level.  

Other stocks that I've sold: smallers winners, losers and in-between, have been all over the place in terms of subsequent gains/losses but in general have underperformed the stocks i replaced them with.

Lesson learned: In the future, stocks that have highly outperformed will require a lower score before they are sold than will stocks that have been closer to average (or worse). 

Current HTO portfolio (in order of purchase): WHR, PRXL, VIPS, FBRC, AIQ, PRSC, VC, TM, DTEGY, ICLR, WLP, FXCM, WNS, GPRE, VLKAY, FIG, HLIT, SNDK, ALR, ARLP, SCOR, CSTE, UBNT, III, MGA, ESLT, HUWHY, FDP, SGNT, WX, ASBI

WHR was purchased at the beginning of the year (+36%), the others are all since May 15. 

I repurchased WX today, had owned it for a big gain, sold it and it continued to rise rapidly and decided that it still wasn't too late to get in.  OTOH, GCAP has been near the top of my wish list since 9/1 but I fear it's probably too late to get in now. 

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