Mr. Perfect wrote:AAPl.
So there are simply different kinds of stocks. There are people who formalize that kind of thing or try to but really there are no hard and fast rules
Before I get into it, the fastest way to bankrupt someone is tell them how to pick stocks. Theyll come back in 3 months with an axe looking for you. So I don't do that.
Or a katana.
To clarify. Not looking for a "stock tip". I don't plan to buy or trade AAPL, rather I picked it as a case study of tradeability. A specific example helps makes things concrete, at least for me.
Also, thanks for your detailed replies. Appreciated.
Mr. Perfect wrote:What is more important by far is asset allocation, stop loss/profit taking/position hedging and management, basic valuations and chart reading skill. Once you have that down then we'll start talking stock picking.
Fair enough.
Mr. Perfect wrote:For applesauce, which I am in, my characterization is it's a big old company and so would be a blue chip like investment, a buy and hold mostly for a long term thing. There is probably more upside than downside going forward but nothing out there likely to ignite it if you will.
Stocks like this are helpful to absorb a lot of your portfolio for the purposes diversification, that is the role it plays in my port port.
Understood.
Mr. Perfect wrote:A note on diversity. A long time ago I looked at my account and saw that one of my positions was up while another was down. I smiled, and felt the pleasure of the benefits of "diversification".
Then a few days later I said to myself: thou retard, divorce thyself from such foolishness. One stock go up, one stock go down, squish, just like grape, no make no money. So be careful of diversity. Crappy stocks can pull you down and you'll keep them in the name of diversification if you aren't careful. Weed 'em out.
Keep the winners and lose the losers. Makes sense.
Mr. Perfect wrote:As for applepie, I did something pretty cool with it you guys may like. I've been holding pretty much for a few years, in and out before hand, but got most of the rip when it was screaming. It seemed like it was topped out a few months ago, when that happens start writing covered calls. This time, when these go down in a stable way, you can short them but something that is a little more "forgiving" is writing in the money calls. As your stock goes down it acts as a hedge, paying you dollar for dollar. You sell one to two strikes in the money and close them as it goes down, and then write new calls even lower.
Mr. Perfect wrote:What that does is of course offset your loss, but if/as aapl comes back those call debits become profits, cash profits. If it works out then months down the road the gyrations won't matter but the cold hard cash profits will be real. There is even more to it but it is technical in nature and takes a lot of writing. Basically you get time premiums with that which helps with what I call "decision risk", ie making poor buy/sell decisions on short term trades that cc strategies mitigate.
Understood.
Mr. Perfect wrote:Back to the untradeable thing, new traders often find a stock through some method and it becomes like a baby bunny that they love and protect, often to their dooms. There are thousands of exchange trades stocks to choose from, if the stock doesn't trade in ways that are obvious to you keep looking.
Indeed.
May the gods preserve and defend me from self-righteous altruists; I can defend myself from my enemies and my friends.