Formula For Success?

[macavoy]

Ok, Im mainly an index fund guy and thats where the bulk of my $ is....

I recently looked at and charted a few "good, solid" companies that arent glamorous but usually do well. Coke, Mcdonalds, IBM, Microsoft, etc.....

I took the highs and lows each year for 5 years and came up with an "average" high and low range.....once a stock comes into within 10-15% of its 5 year low I buy and dump it when it gets within the same % of the top I sell....any ideas, suggestions??? Thanks. Right now IBM and Msft meet my buy criteria...

 

[selkirk]

Macavoy good luck with the strategy, I usually only look out as far as 3 years at the longest.

for the most part 1 year or less is what I use but sometimes go back further 3 years. a number of items, events can take place over five years. could name you many "blue chip companies" five years ago that are now gone or down a large amount.

it would take quite a bit of work but just wondering if you took the 100 biggest companies in the US using this as a guide what would your returns be; in the past, also would you outperform the index.

some large companies for instance considered blue chip are now gone...Worldcom, Enron, Nortel (around $4cdn.) ect.

thanks
selkirk

 

[selkirk]

an example for myself in why I look at short term is ECA Encana which I bought around $42.50 cdn. it has done well, but has lagged behind some of the other cdn. seniors Cdn. Natural resources and Tailsman.

It does not seem to want to break through $60cdn., so I sold off 50% of my position. it is still good value so will keep the rest, great natural gas play, still does not seem to want to move much higher. sure it would break through $60cdn. if I sold the rest

thanks
selkirk

 

[macavoy]

agreed some are gone but the ones I look at arent going anywhere. McDonalds, Pepsi, Coke, IBM, etc.. Five years gives you a much broader range. I havent seen a chart on how this would have done but all stocks go thru and sell within a given range. Up , down, up, stable, down , up. I just think my formula, not magical, but could make some $$..