My Trading Rules

Mike Flowers via comments has asked me to dedicate a post to my Trading Rules.

Here goes:

I have none. I think RULES are pretty absurd. Rules are for the NBA and David Stern. I prefer the word discipline because it is something I can strive for and I don’t hate myself when I am weak. I am weak and have opinions and like to massage my rules.

I think it is better to look at my current portfolio.

I prefer to buy all-time highs. I would say 90 percent of the stocks in my portfolio have been under huge accumulation for months, are heavily owned by institutions and have been growing by leaps and bounds. They are also hated and underowned and overvalued by most definitions. I bought them originally because they broke to all-time highs from sound bases.

I love to buy great brands down 10-25 percent from all-time highs, especially in strong markets (IGT, SBUX, ERTS are recent examples). I define strong markets as those with hundreds of stocks hitting all-time highs. You can look at the widget on my site for those. Right now, we are teeming with all-time highs.

I am a wimp by nature and like buying and selling on the way up.

I will do stupid things often and therefore try to stay away from the screens and the day to day market noise which gets louder every day.

I read just a handful of people on a daily basis – Techmeme, Trader Mike, Maoxian, CrossingWallStreet, FLY, TheStreet.com, James Altucher.

I scan all-time highs daily.

I trade as little as possible.

When in doubt or a slump, I reduce my position size.

I don’t buy TIPS.

Lot’s of carbs.