Re: [CANSLIM] AAII letter to the editor

From: Hong Hsu <honghsu@bellatlantic.net>
Subject: Re: [CANSLIM] AAII letter to the editor
Date: Tue, 15 Jul 2003 21:01:25 -0400

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 >that stock will most probably not come back-even taking into account 
that some stocks >do come back after losing more than 7-8%.  

jans,

    I appreciate your response.   I am not sure I understand your 
comments completely.  Take an example if I may ...

Let's assume a stock has solid fundies and it breakout with huge volume 
from sound base.  One week after the BO, it gained 20%.   Next two day 
or three, it gains another 5%.  At this point I am facing a decision: 
 Take profit OR hold it to shoot 40% gain.   By holding it, the stock 
may end up with 14% gain.  By same token, if the stock reached 40% gain, 
then you have to decide either to take profit or shoot 60%.  Again by 
shooting 60% gain, you have possibility to end up with 30% gain because 
of volatile.

Do you think once a stock lost 7-8%, it will not able to reach new 
higher?    Usually how long you are willing to hold a stock which made 
30% gain within 4 weeks from BO?  

- -Hong



Spencer48@aol.com wrote:

>Hong:
>
>     You didn't ask me, but...
>
>     The 7-8% loss rule is based on WON's experiences in the Mkt:  Many times 
>he has written that stocks that lose 7-8% (assuming that they are bought on 
>the BO), do not BO again.  In other words, not selling at this time could be 
>dangerous to your capital. 
>     Moreover, while you are correct that a stock can come back after a 7-8% 
>loss, according to WON if the stock had been bought at the correct time (ie on 
>the BO), then that stock will most probably not come back-even taking into 
>account that some stocks do come back after losing more than 7-8%.  This is 
>because the stock has run up above the BO point more than the 7-8% stop loss point.
>     Additionally, even though the stock does not continual to lose, I don't 
>believe you are taking into account the opportunity cost of holding a stock 
>which is not moving, but you hope will eventually rise.  Holding a stagnant 
>stock means, while you may not be losing nominal dollars, you are losing the 
>opportunity to invest in  a stock that is moving up.
>
>jans
>
>
>In a message dated 7/13/2003 11:14:20 PM Eastern Daylight Time, 
>honghsu@bellatlantic.net writes:
>
><< I am thinking to use price progress and time to determine stop, 
> something like Parabolic System from  http://www.tradertalk.com/,   OR 
> simply use %, but instead measure from entry point, you measure it from 
> first pivot OR Fibonacci retreat line.
> 
> Your comments will be appreciated,
> -Hong >>
>
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- -- 
 <Linux kernel:>< As a computer I find your faith in technology amusing.




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