[rbizllc]

Hi. I'm a former financial advisor/planner for A.G. Edwards and LPL. Recently retired and am interested in finding out if I can adapt my old fundamental value philosophy to a value/momentum philosophy. I'm not interested in day trading but would like to shorten my holding periods by focusing on stocks that have intrinsic value and have begun to exhibit changes in momentum. I am primarily a "long" investor but would also like to learn more about trading in down markets too.

[Tradewinds]

Originally Posted by rbizllc »

am interested in finding out if I can adapt my old fundamental value philosophy to a value/momentum philosophy. I'm not interested in day trading but would like to shorten my holding periods . .

Sounds good to me. Use value for your foundation, and trade the direction until you see momentum slowing. What are you using to gauge momentum? MACD? Do you pay attention to the news? Do you have a handful of stocks you know well?

[SIUYA]

Originally Posted by rbizllc »

Hi. I'm a former financial advisor/planner for A.G. Edwards and LPL. Recently retired and am interested in finding out if I can adapt my old fundamental value philosophy to a value/momentum philosophy. I'm not interested in day trading but would like to shorten my holding periods by focusing on stocks that have intrinsic value and have begun to exhibit changes in momentum. I am primarily a "long" investor but would also like to learn more about trading in down markets too.

welcome....first suggestion is as a longer term investor, dont get too caught up with a lot of discussions that are short term focused....very different mindset.

at a guess you will have to focus a lot on money management as often the best fundamental values are found in unloved downward trending instruments, and these can remain unloved for large periods of time - so you need to work out how to stay solvent.
Alternatively by applying virtually any simple momentum type indicators (longer term moving averages, donchian breakouts) over those instruments that form the subset of undervalued and now trending instruments will also work with less worry.....let the market also agree with your ideas of value
As a longer term investor and a financial adviser you would also understand the best thing you can do is probably wait for the market to trend as well - for stocks are notoriously highly correlated.
When it comes to trading in down markets - particularly when it comes to stocks personally I have found that the best trades are to sell the short term rallies, selling breakdowns in stocks tends to hurt a little more as the majority of stock investors are long only and look to buy dips which then cause breaks to be more short lived and subject to the so called short covering rallies...otherwise the general principles still apply

[thalestrader]

Originally Posted by rbizllc »

Hi. I'm a former financial advisor/planner for A.G. Edwards and LPL. Recently retired and am interested in finding out if I can adapt my old fundamental value philosophy to a value/momentum philosophy. I'm not interested in day trading but would like to shorten my holding periods by focusing on stocks that have intrinsic value and have begun to exhibit changes in momentum. I am primarily a "long" investor but would also like to learn more about trading in down markets too.

I would suggest that Nicolas Darvas's How I Made $2,000,000 in the Stock Market and William O'Neil's How to Make Money in Stocks, and in that order, would be two great books with which to start. Both can be thought of as value/momentum traders. Both look for strong technical (momentum) action by the stocks of fundamentally strong companies.

If you are primarily a long investor, I would also sugest that you remain so until you become more comfortable with a "trading" as opposed to a "buy and hold forever" type strategy. This means you want to be in cash during a down market, rather than short, and only be long when the market is in a confirmed uptrend. Of course, that is somewhat easier said than done, so again, I suggest you read those two books.

Best Wishes,

Thales

[rbizllc]

Thanks to all 3 of you (Thales, SIUYA & Tradewinds) for your suggestions. I'm really looking forward to this phase of my investing career. I've been investing for 37 years and I first got in as a 2nd lieutenant in the Marine Corps in 1974. The Dow was just in the process of bottoming in late 1974 and I could've thrown darts at the Wall Street Journal and found profitable stocks. Over the years I've beaten the averages with a value philosophy that saw me buy beaten down stocks at a discount with a 3-5 year horizon and usually a goal of at least a double in total return. The first decade of this century (2000-2010) has been tough but of course late 2008-early 2009 saw a lot of "can't miss" stocks at bargain prices. When the Dow was below 7000 it was another period like 1974. Now it's tougher. I've got to learn to read stocks that are demonstrating momentum in what may be a fairly sideways market. I'm looking forward to the journey.