The stock is trading at a level that has proved difficult to sustain. Will it finally break through?
What do they do? Link below:
Big believer in checklist. Here is mine:
Should I buy?
* Is it trading at an important technical level that is obvious?
* Is the R/R in your favor?
* What is the likelihood this company will either go bankrupt or it's products or services become obsolete?
* How much debt do they have?
* If heavily indebted, how much is coming due in the next 3-5 years? Can they cover their debt payments based on reasonable analysis?
* Will their product or service become obsolete? This really is too hard to say, too many things looked obvious in hindsight, think Blackberry .
* For individual securities, risk no more than 3% as a starting position. You can always add later.
* Write down a price level that you will consider liquidating all or part of the position.
* What is a reasonable price target?
* Write down the answers to the questions above and if you can answer yes to all of them, take the trade.
OVER THE LONG TERM, THE WAY TO WIN IS TO HOLD ONTO YOUR WINNERS, AND CUT YOUR LOSERS. IT IS AS SIMPLE AND AS HARD AS THAT.
As always, please leave any comments or questions.