businessman's risk: How to profit from bear market panic

자료: redifff news, http://www.rediff.com/money/2008/apr/17bspec.htm

※ 메모: 

....... This is true in all circumstances, not merely during market downturns.

16 triggers for selling

The company-related reasons to sell are:

• Sell if the news cannot get any better.
• Sell if things did not go as planned.
• Sell when the broker's advice goes from 'buy' to 'hold'.
• Sell if company fundamentals are getting sick.
• Sell on the rebound in the aftermath of material, unexpected or discrete bad news.
• Sell in certain cases when expected news is delayed.

The market-action reasons to sell are:

• Sell when the stock reaches the target.
• Sell on an unsustainable upward price spike on big volume.
• Sell when a portfolio shows all gains.
• Sell if the stock is lazy money and likely to stay that way.
• Sell using above-market limit orders, letting the market come to the investor.
• Sell with a stop-loss order, but never remove or lower it.

Investor-related reasons to sell are:

• Sell if you would not buy the stock again today.
• Sell after gloating or counting the chips.
• Sell rather than hope against hope for a 'maybe' bailout.
• Sell and step aside on a personal losing streak.

If you regularly sell stocks in a disciplined manner, say after periodic 6-monthly reviews using the signals above, you are likely to end up with a good deal of cash even before the market moves into a bear cycle. Relatively few of your holdings will survive the 16 triggers noted in the lists above.

Those stocks that do survive will tend to be high-quality growth issues that have continued to perform fundamentally and have not run up to unreasonable price levels. Some experts refer to these as core holdings or 'businessman's-risk' foundation stocks. They are stocks that have given consistent indications they can be held through good and bad in the market.

So if you are periodically reviewing and cashing in as prescribed, and if your buying discipline rejects new positions when valuations get too pricey, you will anyway end up holding only relatively few stocks as the market gets toppy - and even before it turns down. That, of course, protects your capital.