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|
Magic Charts Newsletter
November 2nd, 2001 |
This issue includes...
1) "How is the sample portfolio ?"
2) "The trading method of the portfolio"
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1) "How is the sample portfolio ?"
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Our sample portfolio is on 66,2% gain this year.
There is a screen shot on the bottom of this page.
Moore Corp is in the trouble zone (minus 13,9%), it is on its
long support line.
Office Depot (minus 11,7%) is just above the long support line.
We are selling them when they close up or under minus 20%
from their highest point.
We see that when ever there is
a big movement in the market,
the regions with profitable stocks change.
This means for our portfolio that we sell those stock who are
declining (minus 20% from there highest point), this makes our
portfolio more robust because when we sell stock we are
lowering our debit percentage along.
Our gain went from +70% at the beginning of September to
+72,6% on October 28 with a fast drop to +65% on October 30
and we are climbing again.
So our portfolio is stable during these uncertain times.
Due to all the sold stock the last month, we have lowered our
debit percentage to 0, and even have cash available to buy
new stock at the end of this month.
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2) "The trading method of the portfolio"
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We get a lot of questions about the way the sample portfolio
is setup, and we are thinking about devoting a website to
methods of trading stock.
We are trading stock for quite a few years now and are
constantly looking for ways to improve our results.
After the drop of the stock market in March last year we tried
several simulations and found that if we had used our
'Buy the Winner' method we would have gained about 90% over
2000 instead of the minus 20% we got with our old method.
The results are promising with a gain of about 70% this year.
So we modified the Magic Chart program to be able to easily
use this method and find the best stock!
The 'Buy the Winner' method:
We use the mechanism that fast rising stock tend to rise
further, if the charts look good.
We use the Buy the Winner view from our Magic Charts program
to see which stock outperformed during a 3 months period
then we go from the highest and select the stock which show
a strong rising figure.
We buy stock for about 10% of the total value of our
portfolio until we reach the 50% debit, or we run out of nice
charts.
- We only buy once a month,
and we sell a stock if it closes
lower than 20% under it's highest point, or the figure
continues horizontally without a horizon of further rise
in the near future.
- Every three months we buy
new stocks, in between we buy
more stocks from the stocks already in our portfolio.
- We use an up to 50% debit
percentage to be able to buy more
stock when our portfolio grows.
Benefits from this method:
- Low Risk, High prophet!
- Peace of mind, you don't have
to follow the financial news,
recent lawsuits shows that a lot of analysts are forced or
payed to write good reports, there was an increase of only
2% in Sell advises over the year 2000 where the Nasdaq lost
40% of its value!. Analysts prefer to write positive
reports. Positive reports are more profitable for the banks
they are often work for, and if they write a negative
report about a company it is likely that that company will
ban them from information, making it much harder for the
analyst to do their job.
- Peace of mind, You know when
to buy stock, en when to sell
the stock.
- Takes only a few minutes a
day, just check if there is no
stock which has to be sold!Disadvantage of this method:
??, we could not think of anything.
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Copyright 1998-2001 by Magic Charts. All rights reserved.
This document may not be copied in part or full without
express written permission from the publisher.
Trading in stocks involves risk. You can lose money. We are
not making recommendations to buy or sell any stock. we share
our views about how to trade stock.
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Magic Charts sample portfolio per 31-10-2001
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