1. "Buy n Hold" is a flawed strategy Dont listen to the so called GURUS u encounter in media. They have billions of $ at their disposal since they handle hedge funds (other peoples money)
2. Retail Traders have limited resources and as such you have to constantly harvest profits and recycle them into another leading stock.
3. We constantly have "Sector Rotation" going on. This is what big institutions do with their portfolio. Today as I write, we r seeing a breakdown in the Technology Stocks. There were 38 winning stocks that I have blogged about and brought to highlight on my speaking tour. I had suggested trailing stops on them last Monday and agin adjustments made further up on Wednesday. This morning mkt is getting hammered on Technology stocks. 34 out of 38 stocks got stopped out on Friday and today. That is how u limit your losses and conserve the profits.
Financials peaked in march n they made a round trip within 2 months and gave all that profit back. They are rising again since last week but one should have harvested profits and gotten back into the leading names last week again. Piling up 8% to 15% gain in every cycle would allow you to outperform the market consistently. Buy n Hold just doesn't work on Growth Stocks for me.
Review the performance of $ATHM:
a. Entry 1/23 exit 2/8 (2.5 weeks) gain 10% profit
b. Entry 5/12 exit 5/17 (3 days) gain 10% profit
c. Entry 6/5 exit 6/7 (2 days) gain 10% profit
You limited the "TIME" risk in your trade. The longer you hold a position, greater the risk you encounter with market risk.
Just FYI ... I closed out my entire position on $QQQ this morning. In just 2 days, the index has already dropped -3.68% This leading index was already up by 21% YTD (year to date) By 10.20 this morning, the index had already traded 2 times the daily average volume. This is the kind of loss you want to mitigate as a Retail Trader. Don't listen to the GURUS who will tell you to buy on the "DIP"
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