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Strategies & Market Trends : Ted Warren's Investolator
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To: robert b furman who wrote (1656)3/12/2025 9:11:27 PM
From: Harvey Specter  Read Replies (2) of 1704
 
Thank you for the reply. I find the long-term base breakouts to be the most reliable and fruitful (more reliable and fruitful than buying on breaks above gradual downtrend lines with a few exceptions). SFM is a prime example of what I look for. Notice it broke out of a six year long base in 2022 then the overall bear market at the time temporarily dragged it down. However, if you held on you would be sitting on a 329% gain today. Below it are a couple of examples from Ted's book.

I use position sizing of 5% per position with no stops and cast a wide net so no dog can wreck my portfolio because I have many other stocks that can make up for the duds. I did the math and hypothetically if you averaged a 200% or more gain on your winners (what Ted says in his book that you should average on long-term base breakouts) and worst case scenario you average a 100% loss on your losers, you'll breakeven if you're right a third of the time. If you're right more than a third of the time you're profitable, and if you're right 50% of the time or more you'll make a lot of money. I focus primarily on long-term base breakouts like the ones in the examples and will only buy breaks above a gradual downtrend line if there's already a long-term base formed and I'm either buying within the long-term base or a breakout out of a long-term triangle base.



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