| Stage three – Portfolio Management: The Key to Success:
Investment Success depends on two basic things: picking good stocks that increase in price, and effectively managing the stocks after you buy them. Portfolio Management in simple terms means, you as the investor, have an idea of where you are going to lock in gains or cut your losses should the stock not act well. This is a vital section as how you manage your winners and losers will define you success as an investor.
As with any job or investment, we are going to have our ups and downs. If you actively trade or invest in the stock market, you are going to have some poor picks along the way. It's how we manage the bad ones that likely will define us. On the flip side of that topic, what if we sell our winners too soon? As we move through this section, we will discuss some signs that we tend to look for as we consider when we should pare back the winners and cut the losers before they get out of hand.
The Power of Selling
A big part of being a successful investor is knowing when to sell. While mainstream Wall Street may ‘shun,’ the use of the word, we view selling as an invaluable tool. Its very hard to determine the exact point to sell a stock as so many individual investors simply will ignore the warning signs that a stock is acting poorly on heavy volume, and will continue to hold this name ‘hoping’ the situation will improve. Wall Street likes to teach us only to buy and ignore selling as the stock ‘will always come back’ if we remain patient with it. While the stock may rebound in the future, why not take action and sell the stock on the first signs of initial weakness and simply buy it back when the technical conditions of the stock improves? As Sharks we are constantly aware of the changing market environments, and will take action when we feel danger could be lurking around the corner. Let's take a look at a couple of examples of how powerful a tool selling is.
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Stage 1 - Tools of the investing Shark:
Introduction
Charts
Moving Averages
Volume
Stage 2 – Different Patterns:
Patterns
Fundamental Research
Stage 3 – Portfolio Management: The Key to Success
The Power of Selling
Partial Buys and Partial Sales
Common Shark Language
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