Trying to predict the future is futile. This includes trying to pick the top stocks for any given year.
Legendary stock trader William O'Neil of whom we were key disciples always said in news interviews he had no idea where the market would be in the future.
Legendary futures trader Ed Seykota always has said the future does not exist so why try to predict it?
The Dumbest Question In Investing Is Probably, "What Is The Market Going To Do?"
The future does not exist, so we do not try to predict it. The same goes for picking which stocks will do well in 2017 since many things can go wrong between now and the end of 2017. Granted, there is nothing wrong with discussing which stocks can potentially dominate their space in an exciting new technology, but it is important never to get mentally wedded to any one stock. So much can go wrong on a day-to-day basis.
We have seen all too often how an investor thinks a particular stock might be the next Cisco. They end up putting too much focus or capital into the stock. They may also hold the stock too long, especially if they are showing a loss. Meanwhile, as their loss grows which hurts their trading psychology, they miss other possible Ciscos. I've often said the chance of a lifetime when it comes to stocks comes around every few weeks.
Rather, one should screen for the best stocks using custom-tailored filters, create a watch list, then use chart patterns to time their entries. Chart patterns allow an investor to know exactly where they will enter and where they will exit. An investor will therefore know his probable maximum loss, barring any overnight gaps lower in their stock or stocks, though most all stocks give clues in their chart patterns ahead of any major gap lower. In my 25+ years as a trader/investor, I have only had two stocks gap lower overnight without warning. I consequently keep my maximum overnight account exposure at 25 to 45% for any one stock unless that stock has shown a profit. I have used this technique for well over 25 years with success well beyond what I could have imagined. Of course, position sizing can greatly vary depending on one's trading style. There is no one right method.
We keep a close watch on the price/volume action of those stocks often with top fundamentals which include a unique story that gives them first mover advantage or dominance in their market space. When an entry point shows up on the chart that carries low risk, typically less than a 4% loss from entry point, we buy the stock and/or put it on our Focus List for our members letting them know we have taken a position. That said, my holdings are usually quite different from Gil's holdings as our investment styles are fingerprints, unique to each of us.
That said, we always know our exit points which helps us manage our risk. Risk management is key as it prevents an account from blowing out. Legendary futures trader Ed Seykota always told me the three most important rules of investing are 1) Risk Management, 2) Risk Management, and 3) Risk Management.
We typically look to buy only those stocks with potential profits that far exceed any potential losses. So while our losers tend to outnumber our winners, the gains on the winners far outweigh the losses on the losers. We describe our strategies in detail in the FAQ and archived reports section of www.virtueofselfishinvesting.com as well as in our bestselling book How We Made 18,000% in the Stock Market. We have also been interviewed hundreds of times where we discuss our strategies here: Virtue of Selfish Investing In The News : Page 1
Here is one of many examples we shared with our members via time-stamped emails (see links below):
NVidia (NASDAQ:NVDA) was one of the top performers in 2016. NVidia is positioned for the fast growing cloud computing sector via AI, robotics, and autonomous driving. Indeed, it recently introduced a new artificial-intelligence supercomputer chip, called Xavier, which is designed for self-driving cars. NVidia indicates that the company is developing processors for upcoming Apple (NASDAQ:AAPL) products as well as for carmakers Tesla Motors (NASDAQ:TSLA) and BMW, among others. Given that Apple is working on automotive technology and perhaps its own vehicle, it would not be surprising to see NVidia team with Apple on its car project.
We first guided our members to buy NVidia when it had a pocket pivot buy on April 6, 2016. A pocket pivot is an early entry buy point first identified in 2005 by Dr. Chris Kacher. We then guided members to buy it again when it had what we call a buyable gap up (BGU) on 5-13-16: Buyable Gap Up - NVDA 5-13-16 A buyable gap up is another actionable buy point also identified by Dr. Chris Kacher back in 2005.
We then provided additional guidance along the way for those who may have missed those two earlier buy points.
NVDA then moved higher by well over 200%.
We then guided members to sell on December 26 and 29, 2016:
(The above two reports are time-delayed by 30 days for non-members. In the interest of fairness to our members, since we are still within the 30 day delay period, please email me at firstname.lastname@example.org if you wish to see the reports. This way, only those two reports can be viewed by non-members).
Note, whether one decides to hold NVDA the whole way or not is somewhat irrelevant since each person's risk tolerance is different, much like a fingerprint. One's decision of when to buy, how much to buy, how many times to buy, and how many times to sell is strictly a personal one. Furthermore, there are many ways to profit thus some diversification is always wise. Indeed, go through our report archives to see the number of actionable stocks that were profitable in 2016 and in prior years. Windows of opportunity always appear. Our job is to make sure our members are aware of such opportunities. It is one reason why our memberships continue to grow even in this tough environment.
Even though we could have retired after the year 2000, we continue to trade the markets to this day. It is extremely rare either of us would miss a trading day since 1995. We love teaching others how to find their own path when it comes to being a successful trader. We believe risking money amplifies one's personal strengths and weaknesses. This financial journey is similar to a spiritual journey. One must know oneself. One must know how their ego often dictates their actions. As one evolves as a person both mentally and spiritually, one often finds other aspects of their lives improving. And they might find their relationships and finances improving.
Also, by sharing our trading strategies, we sometimes get important feedback that helps us fine-tune respective strategies so we all benefit. We have always had this open door policy when it comes to the sharing of ideas, after all, ideas beget ideas.