Leading Off…

March 14, 2014

Tim Reazor
Chief Investment Strategist
Noram Asset Management

This is not the time to go short.   This is also not the time to go long.  What this evening or morning (depending upon when you read this) represents is a moment in time to own your own investing destiny.  Let me explain…

Taking losses is never fun, but I did that today.  Everyone takes losses.  It’s flippant to say losses make you stronger.  Losses only make you stronger if you debrief your buys and sells and analyze if any mistakes were made – and then don’t repeat those mistakes.  Simple right?!  Far from it… get a notebook, write your mistakes down and then study them every time you’re about to buy and sell a stock.  Are you repeating “bad” history?  You’ll only know if you write your mistakes down and study them.

Some of you are holding on to stocks that you know in your heart of hearts you should not be holding onto.  You wanted to cut your laggards free when they were 5%-8% losses.  Now some of you have 15%-25% losses.  You’re praying to the stocks gods for a relief rally. Directional options traders are feeling even more pain. These traders are most likely curled up in a ball on the floor in real pain – especially if you traded too big for your account.

Don’t be afraid to own your investing destiny.  Take proactive losses and allow your winners to run.  Again, I know – sounds simple…

Are you caught in no-man’s land?  You had a 25% profit and now you have a 10% profit and you’re wondering will my stock come back? Should you hold on?  Who is this stock god you speak of and what prayer should I be saying?

Here are four questions to ask if you’re caught in no man’s land.  If you get three out of four “yes” answers to my questions you have to sell your stock. I developed these a number of years ago and they have served me well.

Remember you can always re-enter a stock at a more advantageous time.  Which will save you a whole lot of financial and mental anguish.

Here are the questions –

1 – Did my stock close below the 10-week simple moving average or 50-day simple moving average?

2 – When my stock is falling in price is it gapping down?

3 – When my stock is falling in price; is it selling off in high volume?

4 – Has the market’s trend changed?

If you get three “yes” answers – sell.  If it comes back fine… don’t dwell.  Think about all of the times you hesitated and wished you would have sold a lagging stock for a small loss, but you didn’t and it became a huge loser for you.

Also, note most investors don’t start out as long-term investors…most investors would rather take 15%-25% profits and stalk the next winning trade – like a lion hunting on the Serengeti.

Two notes…

For the time being – don’t initiate any new trades.

This weekend I’m going to devote my radio show to helping you survive this period in the market.  I’m going to treat this weekend’s show like a workshop. I’m going to cover offensive selling, knowing when to harvest profits and how to pick stocks and design trades to maximize gains while minimizing risk.

Tune in this weekend at 11 eastern/ 10 central to 1190AM Dallas online, on the iHeart Radio App just search for 1190 AM in Dallas or listen to my home station of 1190 AM in the Dallas / Fort Worth area.

In the meantime if you have any questions please email me – Tim@NoramCapital.com or talk to me on Twitter – @TJReazor is my handle.

Best Regards,

Tim