Don’t Be Afraid of New Highs
- Posted by Joe Fahmy
- on August 29th, 2013
I wrote a blog post recently about 5 stocks that could be higher by year-end. I discussed them in this video I did for Yahoo Finance. I received many comments about this post and the most common one was: “How can you pick stocks that have already gone up so much???” Here are my thoughts:
1) Some stocks have huge potential over the longer-term. Keep in mind that $DELL $MSFT $CSCO $INTC all went up +20,000-75,000% in the 1990′s. I’m not saying that the stocks mentioned in my post will do this, I’m simply saying that moves can sometimes go on MUCH LONGER than we expect. For example, $AAPL didn’t go from $100 to $700 without making a new high practically every month.
2) Many people are horrified to buy a stock that’s at or near a new high. They would rather buy a stock that has been crushed and is “on sale.” There are plenty of summer clothes “on sale” right now at the retail stores. You know why they’re on sale? Because no one wanted them
3) Keep in mind that I trade momentum and high-growth stocks. This style is not suitable for everyone and having a strict loss cutting policy is a HUGE part of my strategy. If I’m wrong, it’s no big deal. I simply get out and move on.
4) Many traders don’t like the stocks I discussed because they are all “high-priced.” They prefer trading stocks under $10. I prefer to traffic in institutionally supported stocks, which tend to be above $50. Keep in mind, think in terms of percentage and not the number of shares you can buy.
5) No one has a gun to your head!!! You don’t HAVE TO buy a stock just because someone mentions it in a blog or on Twitter. In fact, if your investment process involves buying stocks that someone mentions on social media or TV, strongly consider developing a new process.
Good luck trading and enjoy the long weekend!
I can be reached at: [email protected].
The information in this blog post represents my own opinions and does not contain a recommendation for any particular security or investment. I or my affiliates may hold positions or other interests in securities mentioned in the Blog, please see my Disclaimer page for my full disclaimer.
Joseph Fahmy is the managing director at Zor Capital, LLC, a New York based investment management firm. Joe has over 17 years of trading experience...More »