Re: Technically, time to cash.
in response to
by
posted on
Apr 30, 2010 09:24AM
It's easier to ride out a dip when you're already sitting on a huge profit. :-)
My own plan is to come back to this stock every month or two, or after every "major event", and do another back-of-the-envelope valuation. Then I'll estimate its future potential downside, as well as its potential upside and the timeline of that upside. Once the downside vs upside no longer fits with the level of risk I'm willing to accept, I'll dump it in stages and just walk away.
My problem with TA is that correlation does not prove causation, and (yesterday's price behaviour aside) TA-heads whose blogs I read on the internet don't always seem to be able to predict anything with greater than 50% (or even 10%) certainty. I did better than that back when I did Tarot readings.
What's annoying is when some TA fan (on Stockhaus, often enough) looks at the chart for some tiny exploreco, trading 10,000 shares a day, and predicts a breakout based on some ascending flag or evening star doji or 20-day EMA, without any regard whatsoever to what really drives the stock's price - its news cycle.
If TA worked for you in this one instance, that's awesome, and I celebrate the extra 15 cents a share that you've won. Honestly, better to you than to the big guys. I just don't trust TA as a price predictor, and believe there's a fundamental (or market-psychological, or criminal, *cough*-Canaccord-*cough*) reason for everything.