I like to “date” stocks.
I’m not looking to marry them…
Okay, I admit the joke was funnier as a bachelor.
A few months ago, I married my wife, Meghann.
And I’m very happy about that.
But my approach to stocks remains the same…
I like to keep things casual.
I only want to own a stock during the good times.
They’re flings… nothing more.
The moment I see red flags, I’m sneaking out the back door – shoes in hand.
Here’s a perfect example of why I feel this is the better approach to the stock market…
In June, I bought shares of Deswell Industries, Inc. (DSWL) after adding it to the Traders Daily Direction Watchlist the month before.
I bought at $4.10 a share. And I sold it all within two weeks, booking a net gain of 18.5%.
And thank God I did. Look at that chart!
DSWL plummeted all the way back to my entry point and then some.
Things got ugly. And they got ugly fast.
Why did the stock fall? I have no idea. And, honestly, I don’t care.
I’ve already moved on from DSWL and deleted the ticker from my Watchlist. I’ve dated dozens of stocks since then.
The Ultimate Trading Goal
The goal of a stock trader is not to find names to hold forever… at least not if you want to outperform the market.
The goal is to generate the largest possible gain in the shortest amount of time and compound your returns.
That’s the secret to super performance.
Now, you may be thinking to yourself, “Yeah, but I own good stocks. They’re market leaders. They aren’t going anywhere.”
Well, let me give you a little history lesson…
In 1996, investors thought Amazon.com, Inc. (AMZN) had no chance of competing against Borders. Where is Borders today?
In 1997, Blockbuster was king, and Netflix, Inc. (NFLX) was a joke. We know how that one panned out.
In 1998, Wall Street was pouring money into Yahoo while Larry Page and Sergey Brin were quietly building their search engine startup, Google — now Alphabet Inc. (GOOGL).
Yahoo was sold to Verizon Communications Inc. (VZ) for an embarrassing sum. Google is worth almost $2 trillion.
BlackBerry Limited (BB) controlled 50% of the smartphone market in 2011. That was only 10 years ago.
But when’s the last time you saw someone typing an email on their Bold 9700?
GoPro, Inc. (GPRO), General Motors Company (GM), Nokia Corporation (NOK), Lehman Brothers…
Every year, stocks that were once titans of industry collapse. And every fall delivers large losses to investors who thought they could hold forever.
So, don’t get attached and marry your stocks.
Instead, date them, and let the good times roll.
Embrace the Surge,
Editor, Traders Daily Direction