We’ve all heard the cliche that “shutting the barn door after the horse has bolted” means one is late to action after the damage is done. Yes, it’s human nature not to dwell on negatives when the stock market ride since March, 2009 has been so exhilarating. Consider these returns;
- Netflix (NFLX) is up more than 3,400%
- Amazon (AMZN is up more than 1,300%
- Apple (APPL) is up more than 1,200%
- Cyclicals Sector (XLY) is up more than 500%
- Industrials Sector (XLI) is up more than 450%
- Technology Sector (XLK) is up more than 400%
- Vanguard Total Market (VTI) and S&P 500 (SPY) both up more than 300%
You get my point on the performances. Folks, these are not normal historical returns over an 8-year period. This is an elastic rubber band that is being stretched. I am not prognosticating about when it will snap back. I’m only suggesting that you polish up on your selling disciplines with the expectation that it will snap back eventually.
Buying is easy. You always have lots of company. Just google stock market books. The overwhelming majority of those books are all about buying. Don’t quote me on this, but intuitively the ratio of books on buying equities versus selling strategies is 1,000-to-1. It’s always been that way.
At the risk of sounding like former vice president Spiro Agnew who complained about “nattering nabobs of negativism,” I’m merely suggesting that preparation is prudent and good. On the buying side, you often receive many different invitations to participate. Not so on the sell side. No invitations will arrive, trust me. It is a solo activity and one must be bold!
In our book “Tensile Trading”, we devote all of Chapter 9 to specific selling methodologies.
A good deal of Chapter 3 (The Investor Self) deals with removing barriers preventing investors from being action-oriented and making them capable of pulling the trigger when the time comes.
In our book, DVDs and blogs, we’ve described the five best selling strategies I’ve found over the past 25 years — from the simple and straightforward “3 Peaks” all the way up to my personal selling checklist. Coincidentally, on October 28th (this Saturday) I’ll be teaching a 3-hour seminar at Bellevue College (Continuing Education Course #F9170) on these five sell strategies:
- 3 Peaks
- Pyramiding out and using seasonality to exit.
- Negative institutional money flow
- The Tensile Trading fading relative strength methodology
- My personal selling checklist
Whatever your sell-side strategy might be, I am merely advocating that you polish your selling tools while the sunshine is beaming. I’d like to leave you with this insight from Charles Darwin, “It is not the strongest of the species that survives. It is the one that is most adaptable to change.”
Trade well; trade with discipline!
- Gatis Roze, MBA, CMT
- Grayson Roze
- Author, Tensile Trading: The 10 Essential Stages of Stock Market Mastery (Wiley, 2016)
- Presenter of the best-selling Tensile Trading DVD seminar
- Presenter of the How to Master Your Asset Allocation Profile DVD seminar
- Developer of the StockCharts.com Tensile Trading ChartPack