I will sell partially or entirely out of a security when its fundamentals change - when it's no longer cheap (excessive PE, PEG, P/B, P/S, etc) earnings / revenue start to dry up or are projected to do so, margins tighten, debt level gets out of hand, cash flow dries up, ROE declines, etc. Of course many other things can make a security a buy or a sell / partial sell. Management changes, new or better products or services, activist shareholder activity, etc, etc. And a "sell" for me does not always mean a "short" by a long shot. The price can continue to go up or even just stall for a variety of reasons.
I like to "go with" whatever everyone is getting excited about at the time. This is an "in general" statement of course. If I hear something abuzz in the news then I look for a few companies that stand to benefit from whatever that buzz is. I'll then look at those companies, buy from one or two of them, wait to earn a quick ten or twenty percent profit, and then bail out of again without looking back. I don't sulk over what I "could have gained". I am generally an emotionless investor that looks that the patterns and banks on the emotions of the masses. I have a moral card that holds me back from making the sort of money that I used to however. If I think that a product or company is going to harm others, or the environment, then I won't take advantage of the uneducated masses. "So what" I think to myself, I have enough money to live off of and enough to share with others that are struggling just to have food and clothing. So I have plenty.
My strategy in this uncertain climate is to simply hold a bunch of blue-chip dividend-paying stocks. I feel this is like the calm before the storm. We are due for a correction because there is no way this 2014 bull run was warranted in any way.
In my market trend research this afternoon I was reading over an article highlighting a more academic paper entitled "WISDOM OF CROWDS". I haven't been doing this long enough to know how many studies have already highlighted the kind of investment strategy that I use. It seems to me that my "strategy" just makes too much common sense for me to feel like I have the inside scoop on something. If anything I would think that more skilled investors would look at my strategy, snub their nose at it knowing that yeah it works, but they have stronger strategies that work better. However, for us not so astoundingly analytical investors, maybe we can make some use of this study that was done by the Georgia Institute of Technology, Purdue University, and City University of Hong Kong. They say it's the first study, but like I said in the paragraph above, I just don't think that my method of investing is so "earth shattering" as to be at the forefront of the science of investing. If this study truly 'is' a first, all it will do is give teeth to what I think millions of investors already know.
Well, if you think the market is moving too high and becoming volatile there is always ways to hedge against a correction. Buy put options or inverse ETFs, such as SPXS:
I've been a scaredy-cat and gone with more cash than anything else. I lost more money than I like when the market really dropped a few years ago. But at the same time, I was more of a real-estate investor than a stock market investor.
Might be time to consider getting into the oil sector. Very oversold at this point - $USO, $UWTI look attractive.
