3 Thoughts To Help Make Your New Year A Profitable One

Rather than simply wish you a Prosperous New Year, I would like to
share a few thoughts on what has helped me out in the past so that you may use
them and learn how to create a Prosperous New Year for yourself! 

The first and most important
point I will always harp on is that loss-cutting and an exit-strategy need to
be used when entering a trade.  #1: know where you are going to cut your loss
should things go wrong.  On the flip-side: know where you will expect to take
profits if the trade goes right.  I usually will exit a losing trade when down
7-8% or if the stock violates key areas of support such as 50-day moving
averages.  I will exit winning trades when they gain 20-25%, unless they do it
quickly, whereas I will hold the trade for a longer-term gain.  One thing to
remember is that when a trade is losing you money, you are probably wrong
about it.

The second point I will make
is that it almost always pays to learn from mistakes.  This was a major lesson
that paid dividends to myself as we continue to emerge from the market’s
bottom in 2002 and find very different rallies than one’s I experienced in the
1990’s.  While breakout stocks have been choppy through 2003 and 2004, I
simply started looking at what worked with these same stocks after I had been
knocked out of them.  Many times, they continued on an ascent as the market
truly puts in a bottom and recovers from what appears to be an oversold
condition. 

This brings me to my third
point: historical analysis.  This is not to be confused with learning from our
actual mistakes, but to always take a peek at history before wading into a
market.  Often times, you will be able to use this information to earn much
larger profits than may have otherwise been had.  2003-04 appear to have been
choppy; especially when taking a look at January through June of this year. 
We saw the market rise and fall and basically go nowhere until late-August. 
At first glimpse of simple price action, this seemed a lot like the sideways
70’s, but after further review of past markets, economies and political
conditions; current times size up almost in parallel to the early- to
mid-1930’s.  This period saw an identical period of consolidation in 1934 as
early 2004 and allowed me to realize that we eventually in for a nice move
which we now seem to be experiencing.  Historical analysis can point on some
great longer-term opportunities where we may have otherwise settled for a
quick, smaller-profit trade 

Lastly, I have to emphasize
having fun with what we do.  From Warren Buffet to William O’Neil; every
successful investor I know about seems to have absolutely LOVE what they do. 
There’s no point in adding undue pressure to an already tough game.  We are
fortunate to live in and invest in the most successful economy and country in
the world.  Enjoy it everyday and you are bound to do well as a fringe
benefit!

Happy New Year!

Tim Truebenbach