When to be patient and hold a stock?
In this thread, we'll cover 4 essential points to keep in mind when constructing a Satellite Portfolio.
Let’s go…
#TechnoFunda #Investing
In this thread, we'll cover 4 essential points to keep in mind when constructing a Satellite Portfolio.
Let’s go…
#TechnoFunda #Investing
1. Buying Strategy:
When investing in growth stocks, focus on those where you can forecast earnings for the next year or two, along with potential Price/Earnings (P/E) expansion from the stock's original base breakout.
When investing in growth stocks, focus on those where you can forecast earnings for the next year or two, along with potential Price/Earnings (P/E) expansion from the stock's original base breakout.
Your goal is to select the best stock with strong earnings
and to time your purchase accurately.
Then, have patience, holding onto the stock until proven right/wrong.
Sometimes, after purchasing a stock, it may take a few weeks to assess whether it's performing as expected.
and to time your purchase accurately.
Then, have patience, holding onto the stock until proven right/wrong.
Sometimes, after purchasing a stock, it may take a few weeks to assess whether it's performing as expected.
However, if the stock doesn't meet your criteria or hits your predefined exit level first (usually 8% below your buy point or as per your exit framework), consider selling it.
2. Market Awareness:
In a rapidly changing market, pay attention to stocks that aren't moving despite general market rallies.
In such cases, it might be wise to sell them and invest in stocks breaking out of solid bases with strong fundamentals.
In a rapidly changing market, pay attention to stocks that aren't moving despite general market rallies.
In such cases, it might be wise to sell them and invest in stocks breaking out of solid bases with strong fundamentals.
It's crucial to monitor the overall market condition. Avoid making new purchases when market breadth shows signs of distribution or reversal.
In a declining market, most breakouts fail, and stocks tend to decrease, making it challenging to hold onto your investments.
In a declining market, most breakouts fail, and stocks tend to decrease, making it challenging to hold onto your investments.
3. Position Management:
Resist the temptation to continuously raise stop-loss orders as the stock price rises.
Doing so may result in being forced out during a natural correction, near the low point.
Resist the temptation to continuously raise stop-loss orders as the stock price rises.
Doing so may result in being forced out during a natural correction, near the low point.
Instead, once a stock climbs 15-20% or more above your purchase price, focus on the price where or under what rules you will sell it on the way up to nail down your profit.
Focus on the weekly time frame to avoid noise.
Focus on the weekly time frame to avoid noise.
4. Patience and Confidence:
Remember, the goal isn't just to be right but to capitalize on substantial gains when you're right.
It's essential to have the patience to hold onto winning stocks.
Remember, the goal isn't just to be right but to capitalize on substantial gains when you're right.
It's essential to have the patience to hold onto winning stocks.
Achieving significant profits in stocks requires time, patience, and adherence to a sound strategy.
Following these principles can help investors navigate the market and capitalize on opportunities while minimizing losses.
Following these principles can help investors navigate the market and capitalize on opportunities while minimizing losses.
That's a wrap!
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If you enjoyed this thread:
1. Follow me @MashraniVivek for more of these
2. RT the tweet below to share this thread with your audience
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