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Strategies & Market Trends : January Effect 2001

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To: Q. who wrote (247)2/4/2001 10:41:33 PM
From: RockyBalboaRead Replies (1) of 289
 
Thanks, N

The smaller stock prices also allow to spread a given investment amount over several positions (which is necessary when investing into very small and risky companies).

I excluded a lot of small stocks which had simply too weak balance sheets (like KLOC, CNRS, IMON, XCED, ETYS etc) and too little cash (ADSX, as well as the broken parts of the CMGI imperium) as seen from the last Q report, otherwise I've perhaps ended up buying 40 or 50 stocks (originally I planned to do 25 to 30 different stocks but stopped it at one point).

Regarding the criteria you mentioned (small stock price), I think it is good to analyse staggered by price and form 3 classes.

Additionally it pays off to add some volume criteria to exclude thinly traded stocks which are hard to trade in reasonable sizes, as well as stocks which didn't really deflate. ... (i still have to test whether a big downdraft is significant - tentatively it is necessary).

So, 10 day volume should be > 500k and 3 month volume not less than 200k,...I think. Otherwise it might be difficult to open and especially close positions in block sizes.

You may be right about delistings. First it takes a very long time to delist a stock (PLRX traded under 1 since August I think, only interrupted by 2 spikes and their their 1-8 reverse split.
And if it already trades at 0.125 to 0.40, it doesn't scare me, except that selling off a large position is more expensive as the spreads are higher on the BB.

Most of the dot.bombs were still that cash and NTA rich that the stock price is their only problem.

I'm already guessing what I could buy next year? Bombed out B2B and other Inet stocks, like ARBA, CMRC, VIGN, INSP? Chilled "genes"...?

In any case, I'm looking forward to next years January Effect, N.

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Next year I want to pick a stock like DSLN and forget about the rest. Now, that ugly duckling gained 550%...<g>
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