tag:blogger.com,1999:blog-5465015914589377788.post6776996640877083379..comments2024-03-20T09:32:16.592-04:00Comments on Michael James on Money: Cut Your Losers and Let Your Winners RunMichael Jameshttp://www.blogger.com/profile/10362529610470788243noreply@blogger.comBlogger19125tag:blogger.com,1999:blog-5465015914589377788.post-77318560341169277762020-11-02T08:59:30.057-05:002020-11-02T08:59:30.057-05:00The second reply above is to Canadian Capitalist&#...The second reply above is to Canadian Capitalist's comment:<br /><br />A corollary to your example is how a winning stock can become a dog. Example: I owned E*Trade at one time. Bought at $10 in 2003, sold at $25 in 2007. Today, it is trading at a split-adjusted $1.60. So much for holding on to a winner.Michael Jameshttps://www.blogger.com/profile/10362529610470788243noreply@blogger.comtag:blogger.com,1999:blog-5465015914589377788.post-78775094078237061922014-12-11T21:50:44.718-05:002014-12-11T21:50:44.718-05:00Great post ! however trading is very subjective ma...Great post ! however trading is very subjective many specialize on their own personal niche and what ends up making money for some people may not necessarily work for others. <br /><br />I still rather cut my losers quick and let my profits ride .It just make sense <br />Anonymousnoreply@blogger.comtag:blogger.com,1999:blog-5465015914589377788.post-42554294061463143932011-05-27T08:56:10.489-04:002011-05-27T08:56:10.489-04:00@Dragan: I'm not a believer in complete marke...@Dragan: I'm not a believer in complete market efficiency. However, the manner in which the market is inefficient seems to change over time and we only seem to know about inefficiencies after the fact.Michael Jameshttps://www.blogger.com/profile/10362529610470788243noreply@blogger.comtag:blogger.com,1999:blog-5465015914589377788.post-28720294994924055402011-05-26T23:56:26.148-04:002011-05-26T23:56:26.148-04:00Michael, what I found interesting in the study is ...Michael, what I found interesting in the study is that momentum didn't work for short term past winners which is contrary to the common wisdom that momentum doesn't persist long due to market efficiency.Dragannoreply@blogger.comtag:blogger.com,1999:blog-5465015914589377788.post-80524670565163448972011-05-26T13:19:29.534-04:002011-05-26T13:19:29.534-04:00@Dragan (or is it Draga?): The study is very inte...@Dragan (or is it Draga?): The study is very interesting. It seems that certain specific momentum strategies worked in the past, although the specific way to implement a momentum strategy may not have been known until after all the data was analyzed. I'm suspicious about the fact that the momentum strategies analyzed stopped working over the last 10 years. As the report says, it may not work any more due to the large amounts of money devoted to employing momentum strategies.<br /><br />I also wonder about trading costs, including spreads. Often it is difficult to buy a rising stock at the price you want, and there are commissions to pay (possibly taxes as well). I'd need to see more about the analysis methods used in the paper to form an opinion about how profitable the momentum strategies would have been net of costs.Michael Jameshttps://www.blogger.com/profile/10362529610470788243noreply@blogger.comtag:blogger.com,1999:blog-5465015914589377788.post-78503196360642132322011-05-25T20:47:48.838-04:002011-05-25T20:47:48.838-04:00Michael, check on Google docs, title is Momentum –...Michael, check on Google docs, title is Momentum – A Contrarian Case for Following the Herd<br /><br />https://docs.google.com/fileview?id=0B9DwlVhskXsoM2NjMzEwYTUtNjBlNi00OGFjLWJkZGQtYzQ5ZTdiOGQ0YzE5&hl=enDraganoreply@blogger.comtag:blogger.com,1999:blog-5465015914589377788.post-72009822980808121752011-05-24T03:02:20.937-04:002011-05-24T03:02:20.937-04:00@Dragan: I'm not sure what the problem is, bu...@Dragan: I'm not sure what the problem is, but I can't seem to access the link you provided. I'll try again in a few days.Michael Jameshttps://www.blogger.com/profile/10362529610470788243noreply@blogger.comtag:blogger.com,1999:blog-5465015914589377788.post-62686160418492844102011-05-23T21:22:43.391-04:002011-05-23T21:22:43.391-04:00http://dorseywrightmm.com/
downloads/hrs_research/...http://dorseywrightmm.com/<br />downloads/hrs_research/GMOMomentum.pdfDragannoreply@blogger.comtag:blogger.com,1999:blog-5465015914589377788.post-10475470294472093502011-05-23T21:18:40.940-04:002011-05-23T21:18:40.940-04:00My link got cutoff. Here's the link again:
ht...My link got cutoff. Here's the link again:<br /><br />http://dorseywrightmm.com/downloads/hrs_research/GMOMomentum.pdfDragannoreply@blogger.comtag:blogger.com,1999:blog-5465015914589377788.post-48954203838510892782011-05-23T21:17:05.784-04:002011-05-23T21:17:05.784-04:00Michael, I came across a study that examines long-...Michael, I came across a study that examines long-term returns of a momentum based strategy. It looks like that paper approximates well your case "selling losers and buying winners". In short, it actually does outporform market (index). Check it out here and let me know what you think: http://dorseywrightmm.com/downloads/hrs_research/GMOMomentum.pdfDragannoreply@blogger.comtag:blogger.com,1999:blog-5465015914589377788.post-78370276114546163962011-05-18T20:31:36.237-04:002011-05-18T20:31:36.237-04:00Letting winners run does not mean 'forever'...Letting winners run does not mean 'forever' - making it difficult to collect data. You know that at some point you take profits.<br /><br />Cutting losses does prevent disasters, and to me that is the key to trading.Mark Wolfingerhttp://blog.mdwoptions.comnoreply@blogger.comtag:blogger.com,1999:blog-5465015914589377788.post-76753819887172368432011-05-18T16:15:20.020-04:002011-05-18T16:15:20.020-04:00...reminds me of a saying of the ancient Greeks th......reminds me of a saying of the ancient Greeks that went something like this "the only man who can say he has lived a happy life is the one who dies happy". Who knows what will happen to Apple next month/year/decade? I daresay that sooner or later, down it will go. Market timing is everything!CanadianInvestorhttps://www.blogger.com/profile/05645767559302303541noreply@blogger.comtag:blogger.com,1999:blog-5465015914589377788.post-42467100717204784882011-05-18T15:56:09.758-04:002011-05-18T15:56:09.758-04:00@Anonymous - well said.
@Michael - Winners can be...@Anonymous - well said.<br /><br />@Michael - Winners can be very dangerous, easy to get overconfident with them and lose perspective, get greedy. Neither of those are ever good... <br /><br />BTW - I moved my site Michael, just in case you wanted to find me on the web. I got a new site, now self-hosted:<br /><br />www.myownadvisor.ca<br /><br />Cheers,<br />MarkMy Own Advisorhttp://www.myownadvisor.ca/noreply@blogger.comtag:blogger.com,1999:blog-5465015914589377788.post-51835046325628862982011-05-18T15:13:34.573-04:002011-05-18T15:13:34.573-04:00"Nobody ever went broke taking profits" ..."Nobody ever went broke taking profits" is also something thrown around a bit. Also somewhat dangerous, as it limits your profits.Anonymousnoreply@blogger.comtag:blogger.com,1999:blog-5465015914589377788.post-74198688372989335502011-05-18T13:26:41.454-04:002011-05-18T13:26:41.454-04:00Regarding Preet's comment about fund advertisi...Regarding Preet's comment about fund advertising:<br /><br />"What the large print giveth, the small print taketh away."Ahmednoreply@blogger.comtag:blogger.com,1999:blog-5465015914589377788.post-66092241889997362882011-05-18T13:10:09.190-04:002011-05-18T13:10:09.190-04:00@Blunt Bean Counter: I'm guessing that anyone...@Blunt Bean Counter: I'm guessing that anyone who has invested in individual stocks can come up with examples where this advice would have worked and others where it wouldn't have worked.<br /><br />@CC: I definitely had some good luck of that type with a former employer's stock before it crashed.<br /><br />@Gene: Maybe the study I called for would show that the opposite strategy is better.<br /><br />@Preet: It seems to be a common theme in ads is for the fine print to say that the rest of the ad isn't true.Michael Jameshttps://www.blogger.com/profile/10362529610470788243noreply@blogger.comtag:blogger.com,1999:blog-5465015914589377788.post-64822986934097237882011-05-18T12:36:35.692-04:002011-05-18T12:36:35.692-04:00Right up there with fund advertisements which trum...Right up there with fund advertisements which trumpet past performance, then have a mandatory disclaimer telling you past performance doesn't mean anything.Preethttp://www.wheredoesallmymoneygo.comnoreply@blogger.comtag:blogger.com,1999:blog-5465015914589377788.post-2831552799931776172011-05-18T12:01:07.637-04:002011-05-18T12:01:07.637-04:00Great point. Perhaps winners are actually more da...Great point. Perhaps winners are actually more dangerous than losers. Winners will by definition become more expensive over time. If this is due to price rise alone (not backed up by fundamentals), selling a winner is the right thing to do.<br /><br />I sold a whole bunch of tech winners in 1999 when I finally noticed P/Es in the 100x range. Like CC's example, it turned out pretty well.genehttps://www.blogger.com/profile/05608927986297939720noreply@blogger.comtag:blogger.com,1999:blog-5465015914589377788.post-48856166219309443262011-05-18T08:21:17.633-04:002011-05-18T08:21:17.633-04:00Michael, your blog gave me a chuckle. I have had s...Michael, your blog gave me a chuckle. I have had several such stocks similar to your Apple; which in my mind suggests that selling losers and letting winners run would not in many cases not prove correct. Winners have a momentum affect which I think validates the investing rule in many cases over a short term horizon. However,as you note, i am not sure it is valid over a longer time horizon.The Blunt Bean Counterhttp://www.thebluntbeancounter.com/noreply@blogger.com