Originally posted by Stage-2-Uptrend
Buying high and selling much higher is where the big money is to be made. I like to buy stocks trading at new 6 or 12 month highs. Note that NEA today traded at a new 12 month high [1].
Buying into stocks trading at new 6 month and 12 month lows is fraught with danger that will ultimately lead to a trading account blowing up. This is especially true when buying into weak stocks with leverage. When a stock is trading at an unusually low price, this is because almost nobody wants to own it. The new 52-week low list is the junk pile.
Conversely, winners buy high and sell much higher. They chase stocks that almost everyone would like to own.
Portfolio: AX1, ALU, AWC, BPT, BVS, JIN, NEA, NHC, NST, RRL, RMD, WSA.
1.
http://clients.weblink.com.au/clients/equitiesinfo/
By the sounds of it, your method works for you and that’s great and well done!
However, a casual look at say, NEA 5 year chart, would seem to imply that many people following that philosophy would have had to hold on during some very steep and long declines before they showed a profit.
Anyone prepared to invest for the longer term may be better off to buy low and hang on for the next twelve month high. Inevitably, every 12 month high is followed by a twelve month low and every twelve month low is followed by a twelve month high.
Granted some traders make money from following trends but I would wager that more investors make more money buying stocks that they intend to hold for a long time and then top up during the inevitable pullbacks that will occur from time to time. Those that bought NEA at the most recent 12 month low would be doing pretty well right now. They will get an extra kick along from those traders following trends that buy stocks when they reach new yearly highs.
The moral is, when it comes to investing, it’s your money so back your own judgement.
