Monday, January 25, 2016

Long-term stocks vs. short-term stocks

For many years, I posted breakout ideas on Twitter and StockTwits. I've been happy with seeking these daily setups, mostly based on charts, as well as fundamentals to a lesser degree. Scanning for breakout stocks is fun every night. Actually 3pm is the best.

In 2015, I had some awesome breakouts in $AGEN, $LXRX, $ANAC, $XON, $ESPR and maybe a few others on buyouts. But, also a few shit the bed - $SWIR, $OVAS, $CTSO and $CUR come to mind. Sadly or perhaps thankfully, I'm not a day trader. But I've been scanning the market with this mindset. And 2015 was flat for me after a ton of work. I also work full-time, hike incessantly, and have an awesome summer gig.

Previously, my goal was to scrape 10% out of a stock in one or two weeks. My new goal is to reduce the portfolio dedicated to riskier moves, but seek the same reward on the riskier portion. The safer moves should holds their own, pay a dividend, and not get easily wacked unless earnings suck. Current thinking implies these riskier stocks include those priced under 10, biotechs, and companies with a seemingly weak business model. Biotech and small cap giveth and taketh away. I love the potential with these higher-beta stocks. I can't give it up. The reward is too great. Perhaps if I dedicate less of the portfolio to risk, this percentage can be easier to manage.

In general, I plan to seek a blend of breakouts and "safer" stocks. Maybe this is a consequence of the market conditions. Or, I'm approaching middle age when I previously thought I was approaching Middle Earth. Sorry. I've had that line in me for a few years. If my speculative stock buying proves more fruitful, I can change the balance. Until then...