LAZY DOG Picks

[Deaddog]

Dead,
May I ask how long you have been at trading. And I'm assuming you're a short term trader based on the technical side mixed in with some fundamentals.

Been trading about 10 yrs now. Ever since IB opened a Canadian office and brought reasonable commissions to the frozen north.

I was an "Investor" until I saw the light during the Tech Wreck, and then gave up on buy and hold. I’ve been playing the market since you actually had a broker and had to phone him to make a trade.

I stumbled across this web site while surfing one day and liked the fact that Mr. M. detailed his stock picking criteria. I’ve had some interesting discussions with the Big Fellow on taking losses and position size. Sometimes it’s hard to get a strait answer.

Started this thread as an alternative to the Huge Ones stock picking process and had really meant to keep the losses small. The theory that if you pick good companies they will reward you eventually may have had a little to do with my reluctance to take losses but realistically the Fear that as soon as I sell the stock will take off and I’d look stupid probably had more do to with it.

Seeing how Mr. M measures success by the number of winners in a row, I wanted to show something a little more realistic like realized and unrealized gains/losses.

[skiracer]

Dead,
May I ask how long you have been at trading. And I'm assuming you're a short term trader based on the technical side mixed in with some fundamentals.

[Deaddog]

Thanks Skiracer for the info. I reviewed my trades and would be far ahead of the game had I taken losses even at 10%.

New rule for the Lazy Dog Portfolio:

A stop will be determined for each stock when it is bought.
The stop will be executed as follows; when the stock price closes below the determined stop, a hard stop will be placed just below the low of that day.

I will probably end up with a few higher losses than if I were to take the stop where determined, but I will also not be stopped out on a shakeout test of the lows or be fair game for stop hunters.

Stops will be determined based on support areas, but will keep in mind a 3-to1 reward to risk ratio. If my target is 20% the stop should not exceed 7%.

Stops for existing stocks:

NANO: $15.00 Right now NANO is having trouble breaking above recent swing highs so this one may be cut earlier than $15.00.

TC: $7.00 TC has managed to make new swing highs and has been posting higher lows. $7.00 would be a new 2-year low.

ACAS: $8.13. This is 7% below today’s price. I’d be more comfortable below the last swing low of 7.93 but that’s a 10% loss and I did have the opportunity to get out with 20% and let greed get the best of me.

EBIX and ATML: break even. I won’t let a profit turn into a loss again. I have a 20% gain on 40% of ATML so if I get out at what I paid I’ll be ahead a little.

[skiracer]

Ski:
If you are exiting the minute the stock is down 7% why not use hard stops?

My reason is the the Pro's supposedly hunt stops and I've seen lots of days where price spiked down only to recover later.

If you exit at 7% and have the discipline to re-enter if it recovers where do you now put your stop? 7% below the new entry or do you maintain the old stop?

Dead,
I very seldom use any hard stops nowdays. The 7% point is my mental stop loss. I never let it go farther than 7% from my entry without exiting. If I exit at 7% and then re-enter later its 7% from that point of entry again. The market makers are always looking for stop loss points to take out small retail investors to pick up stock they want to own. Its a gimmick they use frequently and it's what made me stop using preset stops. Anther thing is that I never make a trade before 10 am on any given morning because those spikes up usually come back down after 10 am to either the previous days closing price or lower and then head back up. That's traders grabbing the surge and then selling off.

[Deaddog]

Ski:
If you are exiting the minute the stock is down 7% why not use hard stops?

My reason is the the Pro's supposedly hunt stops and I've seen lots of days where price spiked down only to recover later.

If you exit at 7% and have the discipline to re-enter if it recovers where do you now put your stop? 7% below the new entry or do you maintain the old stop?

[skiracer]

I hear you skiracer; it’s something I’m well aware of. It’s a probabilities game and you have to keep losses small.

How do you handle your stops? Again I’m not comfortable with a hard stop in the market. I know the pro’s play games with stops and have had several stops hit only to see the stock recover within hours.

Since I trade off daily charts I use the following strategy. I have a stop but it’s not a hard stop. The stock has to trade below and close below the stop. I will then sell if the stock trades below that days low. I’m under the impression that this might save me from getting stopped out on a quick spike down. It also usually cost me a little more than the originally calculated stop.

I hate to take a loss but know damn well it has to be done to protect capital.

I have evolved into not using hard preset stops anymore. I am fortunate in that I am self-employed in my business endeavors and thus am able to sit in my office and watch my trades. I am very disciplined and have a high degree of self-control and believe in every word I stated in what I wrote in that post. I exit at 7% or less the minute it reaches that point. I also believe that if you exit and an hour later or sometime later the stock turns then you can re-enter at your leisure and convenience. That's it in a nutshell. Much easier said than done especially with people that have to be at a job from 8 to 5 and do not have the flexibility that I have.
I should backup some and say that on occassions I will preset a hard stop and leave it on during the day but I don't like to leave them on overnight anymore and don't. These days the marktet with their wide swings are just to volitaile. I also am not trading anywhere as much as I have in the past because I believe that the markets are being manipulated by insiders and hedge funds in particular which really puts the smaller retail investors like myself at higher risks of getting stopped out with the preset stops and then the stock will go back up. Market makers have no allegiance to anyone or anything except their big money clients and themselves. They think we are suckers and we are if you play their game. I believe in creating an edge for myself and it is getting much harder to do so nowdays.

[Deaddog]

I will guarantee you this fact Deaddog. Unless you train yourself to accept a specific stop loss point or just a point, some percentage point, where you will automatically exit the trade you will be doing the same thing that you have been talking about next year and the year after that.

I hear you skiracer; it’s something I’m well aware of. It’s a probabilities game and you have to keep losses small.

How do you handle your stops? Again I’m not comfortable with a hard stop in the market. I know the pro’s play games with stops and have had several stops hit only to see the stock recover within hours.

Since I trade off daily charts I use the following strategy. I have a stop but it’s not a hard stop. The stock has to trade below and close below the stop. I will then sell if the stock trades below that days low. I’m under the impression that this might save me from getting stopped out on a quick spike down. It also usually cost me a little more than the originally calculated stop.

I hate to take a loss but know damn well it has to be done to protect capital.

[skiracer]

I'll have to give it a try; the viagra that is

I'm not comfortable with a fixed %. I think I'd rather use support and or trendline breaks. It's something i have to work on. I just know that what I'm doing, waiting and hoping, isn't the way to operate.

On the theory of whenever I sell a stock it goes up I'm starting to scale out of AMTL 20% sold @ 10.40

I will guarantee you this fact Deaddog. Unless you train yourself to accept a specific stop loss point or just a point, some percentage point, where you will automatically exit the trade you will be doing the same thing that you have been talking about next year and the year after that. The problem being that "hope" is rationalized a small percentage of a percentage point at a time until it is multiple percentage points and then all of a sudden you find yourself at a place where you find it to hard to exit, because the loss at that point is more than you want to bear but still reasonable yet you still cannot stand to bear the loss, and then wishing and hope really take over and soon you are in way deeper than you ever thought of being and at that point it is probably twice or three times past the first point where you knew you should have exited but didnt. Some people subconsciously love the pain and martyrdom but don't know or understand that. Every short term trader or swing trader should have a specific exit point of around 7%. That will insure that if in ten trades you exit every losing trade at that 7% loss point you would feasibly only have to have 3 winners to at least break even or if you can maintain control of the trade and let the winners run out then you will make good money and your pile will grow substantially. give the math some thought and weight 7 losing trades at a 7% loss vs 3 winning trades at 15-20% each. and it gets better if by some chance you get 4 winners out of 10. Or reach out to any professional short term trader and question them on their trading strategies and trading plan. No one is necessarily right or wrong. Everyone is entitled to their own opinions but it the guys left standing with the money in the end that are right about what they are doing.

[Deaddog]

ATML: another 20% out the door @ 10.50

[Deaddog]

7% maximum loss on any stock from the point of entry will insure you last longer and your bankroll will also. It's like Viagra, you will last much longer.

I'll have to give it a try; the viagra that is

I'm not comfortable with a fixed %. I think I'd rather use support and or trendline breaks. It's something i have to work on. I just know that what I'm doing, waiting and hoping, isn't the way to operate.

On the theory of whenever I sell a stock it goes up I'm starting to scale out of AMTL 20% sold @ 10.40

[skiracer]

It looks like VECO is beyond help. Right now it’s down over 40% and still headed down.

I’m taking my loss, which I should have taken months ago. A 40% loss means that VECO would have to gain 66% from here just to break even.

My strategy is to take 15 to 20% gains from stocks that go up. Holding on to a stock that goes down just doesn’t make any sense. It’s completely backwards to the theory that you let the winners run and cut your losses short. The end result is a portfolio full of losers with no cash to buy the stocks that are moving up. I have to come up with a strategy to fold the bad hands. And of course the discipline to follow the strategy.

VECO was sold for $30.45 for a loss of 21.55 a share or 41.44%. Ouch! Ouch!! Ouch!!!…

NANO is next on my list. If you are going to live in the Dog House you either do you job or it’s out the door. No more “we’ll give it a couple more days and see”.

TC on the other hand is a long term hold although I might sell in the next little while and harvest a tax loss with the idea of buying back early in the new year. Canadian tax law doesn’t allow you to sell for a loss and re-buy immediately; you have to wait 30 days before you can purchase the stock again.

PS: VECO is probably a good buy right now. My record of selling at the bottom is second to none. That’s why I’m so hesitant to pull the trigger.

7% maximum loss on any stock from the point of entry will insure you last longer and your bankroll will also. It's like Viagra, you will last much longer.

[Deaddog]

It looks like VECO is beyond help. Right now it’s down over 40% and still headed down.

I’m taking my loss, which I should have taken months ago. A 40% loss means that VECO would have to gain 66% from here just to break even.

My strategy is to take 15 to 20% gains from stocks that go up. Holding on to a stock that goes down just doesn’t make any sense. It’s completely backwards to the theory that you let the winners run and cut your losses short. The end result is a portfolio full of losers with no cash to buy the stocks that are moving up. I have to come up with a strategy to fold the bad hands. And of course the discipline to follow the strategy.

VECO was sold for $30.45 for a loss of 21.55 a share or 41.44%. Ouch! Ouch!! Ouch!!!…

NANO is next on my list. If you are going to live in the Dog House you either do you job or it’s out the door. No more “we’ll give it a couple more days and see”.

TC on the other hand is a long term hold although I might sell in the next little while and harvest a tax loss with the idea of buying back early in the new year. Canadian tax law doesn’t allow you to sell for a loss and re-buy immediately; you have to wait 30 days before you can purchase the stock again.

PS: VECO is probably a good buy right now. My record of selling at the bottom is second to none. That’s why I’m so hesitant to pull the trigger.

[Deaddog]

Sold AKRX @ 8.44 for a profit of 20%..

Too busy to shop today, trying to get in as many rounds of golf as I can before the snow hits the ground.

Update on EBIX and ATML:

I have full positions ATML @ 8.62 ......Bot @ 9.00, 8.25 and 8.41

I have full position EBIX @ 15.55 ......Bot @ 15.90 and 14.82

[Deaddog]

Going shopping this morning :

Planning on adding to my positions in ATML and EBIX

Bought some EBIX @ 14.82 and some ATML @ 8.25.

Will buy more ATML at either 8.10 or 8.40 depending on which way it moves.

Got an early tee time so we are operating with stop and limit orders.

[Deaddog]

This morning I nibbled at EBIX
Bought 1/2 position at 15.90

I'll keep a close eye on this and will take a quick loss if it closes below 14.50.
that could be up to a 10% loss but I'm looking for a move up to 19-20 range or a +20% gain.

Fundies are excellent ROE: 26%; Profit margin: 46%; Very little debt: PE less than 10: Sales Growth: over 30%

Theres quite a bit of short interest(Class action lawsuits) and any jump in price could cause a spike as the shorts cover.

A bit of bottom fishing on my part.